On Friday, cryptocurrencies faced a broad sell-off in risk assets, with both Bitcoin and Ethereum hitting multi-month lows. Market concerns over inflated tech stock valuations persist, while expectations for imminent Federal Reserve policy easing continue to fade.

As the world's largest cryptocurrency by market capitalization, Bitcoin fell 2.1% during Asian trading hours, breaching the $86,000 level to touch a seven-month low of $85,350.75. Ethereum also dropped over 2%, sliding to $2,777.39—a four-month low.

Both cryptocurrencies have shed nearly 8% this week.

Often regarded as a barometer for risk appetite, the sharp decline in cryptocurrencies signals increasingly fragile market sentiment—highlighted by steep losses in previously high-flying AI stocks and heightened volatility.

"If Bitcoin’s drop reflects a broader shift in risk sentiment, the market situation could turn very, very ugly—which is precisely the current concern," said Tony Sycamore, market analyst at IG Group, commenting on Bitcoin’s slide.

Data from market tracker CoinGecko shows the total market capitalization of all cryptocurrencies has lost approximately $1.2 trillion over the past six weeks.

In Hong Kong, Bitcoin spot ETFs launched by China AMC, Harvest Fund, and Bosera Fund each fell nearly 7% on Friday.

From Boom to Bust: Cryptocurrencies Reverse Gains Earlier this year, Bitcoin rallied strongly, reaching an all-time high above $120,000 in October amid global regulatory easing for cryptocurrencies. However, prices have since retreated sharply.

Analysts note that last month’s historic crypto market crash—triggered by panic selling, liquidity shortages, and over $19 billion in leveraged position liquidations—has left the market struggling to recover.

"Since that sell-off, the market has felt somewhat disjointed, fragmented, even chaotic," Sycamore added.

Bitcoin has now erased all its year-to-date gains, down 8% for the year, while Ethereum has plunged nearly 16%.

The sell-off has also battered shares of crypto-holding firms. This year saw a surge in publicly listed digital asset reserve companies as corporations capitalized on rising crypto prices by adding them to balance sheets.

MicroStrategy, once a bellwether for corporate Bitcoin accumulation, saw its shares drop 11% this week, hovering near one-year lows. Its Japanese peer Metaplanet has plummeted roughly 80% from its June peak.

"The current bearish sentiment in Bitcoin is the strongest since the start of the current bull cycle in January 2023," CryptoQuant, a digital asset research firm, stated in its weekly crypto report on Wednesday. "Much of the demand wave in this cycle has likely passed."