The recent collapse of Bitcoin and Ether is acting as a stress test for the crypto market, revealing vulnerabilities in balance sheets across the industry. The downturn is impacting companies with significant crypto holdings, exchange-traded funds (ETFs), and even the infrastructure supporting digital asset mining.
The price of Bitcoin is currently trading in the mid-$70,000s, after experiencing a sharp selloff that drove the price down to roughly $73,000, the lowest level since late 2024. From its all-time high near $126,000 in late 2025, Bitcoin has surrendered over 40% of its peak value. Ethereum and other major altcoins have also experienced sell-offs as investors raise cash, cover margin calls, and reduce risk.
Companies with substantial Ether (ETH) holdings are facing significant paper losses. The broader crypto downturn is rippling through corporate treasuries, ETFs, and mining infrastructure, highlighting how digital asset volatility is reshaping balance sheets and operations.
Michael Burry suggests that Bitcoin has been exposed as a speculative asset rather than a reliable hedge against currency devaluation. While gold futures have surged above $5,000 an ounce and silver spiked before correcting, Bitcoin has moved in the opposite direction, dropping roughly 40% from its October high. This failure to follow metals undermines the "digital gold" narrative that many corporate treasuries and funds relied on when accumulating BTC in 2024 and 2025.
The situation is creating a reflexive loop where underwater corporate treasuries lose access to cheap capital and are forced to sell BTC to defend credit metrics. These sales push Bitcoin's price lower, causing more balance sheets to fall into distress, perpetuating the cycle. Miners are also affected, as their revenues are denominated in BTC while their costs are largely in fiat currency.
Strategy (MSTR) reported a $12.4 billion net loss in Q4, largely due to Bitcoin's sharp decline from its October highs. The company is now sitting on roughly $9 billion in unrealized losses after spending $54.2 billion to build its Bitcoin position, with its stock falling over 17% after earnings. Despite these losses, Strategy maintains a long-term commitment to Bitcoin, viewing itself as a "digital fortress" capable of withstanding extreme volatility.
The recent downturn echoes the crypto winter of 2022, when a global liquidity shock wiped out $25 billion. Events like pullbacks from Gemini, layoffs at Polygon, and pressure on MicroStrategy indicate stress beyond just price fluctuations. The US Federal Reserve's raising of interest rates and the stock market's correction have further limited consumers' access to liquidity, contributing to the downturn.