By Renae Dyer
Bitcoin and other cryptocurrencies fell sharply Friday, extending their losses in what has been a grueling week for digital assets.
In a sixth consecutive day of falls for cryptocurrencies, bitcoin dropped to a four-month low of $61,117 in early European trade. Ether fell to a one-year low of $1,627 and solana slumped more than 5% to a two-and-a-half-year low of $63.84, according to LSEG data.
Bitcoin was headed for its steepest weekly loss since the collapse of FTX in November 2022, IG analysts said in a note.
Uncertainty over the Middle East conflict, recent outflows in crypto exchange traded funds and building expectations that the Federal Reserve could raise interest rates have contributed to this week's selloff. Monday's announcement by crypto-hoarding firm Strategy that it sold bitcoin for the first time since 2022 has also dented sentiment.
"Capital seems to be rotating out of crypto and into high-momentum artificial intelligence plays and high-profile tech initial public offerings like SpaceX and Anthropic," ActivTrades analyst Carolane de Palmas said in a note.
Tensions in the Middle East remained elevated, keeping investors cautious over risky assets including cryptocurrencies. Hezbollah rejected a new U.S.-backed ceasefire between Israel and Lebanon while the U.S. and Iran have exchanged fire this week.
Strategy's announcement also came as a blow to crypto investors.
"For a company that has served as the de facto standard-bearer of institutional bitcoin conviction, this is a meaningful shift in narrative, even if the firm says its broader strategy remains intact," De Palmas said.
Until the Iran situation resolves and the U.S. interest-rate outlook is clear, a genuine recovery in cryptocurrencies looks unlikely, said James Butterfill, head of digital assets manager Coinshares, in a note.
"Digital assets are caught in a maelstrom of geopolitical uncertainty, rising interest-rate expectations, and a market consumed by AI, all of which are weighing heavily on sentiment," he said.
Recent better-than-expected U.S. data have bolstered bets the Fed could raise rates. Market pricing on LSEG in early European trade implied the Fed could deliver a 25 basis points rate rise by March 2027.
Investors will be closely monitoring Friday's key U.S. nonfarm payrolls report, due at 1230 GMT, for any hints that rate rises are possible this year. Economists in a WSJ survey expect payrolls to rise by 80,000 in May and the unemployment rate to hold steady at 4.3%.
Any significant deviation from expectations has the potential to change how the Fed might alter interest rates, Hargreaves Lansdown investment strategy director Anna Macdonald said in a note.
Further signs of U.S. economic strength in Friday's data could prompt more falls in bitcoin and other cryptocurrencies.
-Write to Renae Dyer at renae.dyer@wsj.com
(END) Dow Jones Newswires
June 05, 2026 04:54 ET (08:54 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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