Crypto Crash: Why Bitcoin, Ether, Solana Plunged 30-40%

The scale of the drawdown is stark. Beyond Bitcoin and Ether, XRP was off about 10.3% in 24 hours and 42.7% over 30 days, and Solana slid about 12.3% on the day and around 42.8% over the month. Alex Krüger framed the move on social media platform X as a ’10/10 slaughter,’ a momentum break that rapidly turned into a seller’s market. He pointed to a cascade of factors that steadily drained risk appetite. First was a hangover from Digital Asset Treasuries (DATs). More significantly, Krüger highlighted a material but underappreciated shift in demand: ‘major flows reversed after the DoJ indictment of the Cambodian Prince Group last October.’ This suggests a previously reliable source of capital from criminal networks has dried up, removing a key pillar of support.

Krüger paired this with psychological and competitive overhangs. He flagged ‘quantum fears (real)’ as a background concern and, more pressingly, identified the AI boom as a direct competitor siphoning off resources. ‘Capital pivoting to AI, talent pivoting to AI, and even miners pivoting to AI,’ he noted, describing a tightening loop around crypto’s ability to attract fresh capital and innovation. This rotation of financial and human capital represents a fundamental challenge to the sector’s growth narrative.

Beyond cyclical factors, Krüger described profound structural changes reshaping the market’s character. He argued the global bid has narrowed, citing a ‘perception of Bitcoin as American’ and noting there are ‘few Chinese buyers,’ a stark contrast to previous cycles. Furthermore, ownership of the crypto trade is evolving. ‘The Swamp & Institutions taking over,’ he wrote, framing a shift from ‘Cypherpunk/Rebel tech to ETF tech.’ In this view, crypto has transitioned from an asset ‘for misfits & geniuses’ to ‘a line item in a 401k,’ a change that crowds out the volatility-driven momentum that historically attracted early adopters and retail traders.

Other familiar pressure points compounded the selloff. Krüger cited political risk around the sector’s association with former President Trump, questioning ‘what happens once Democrats are back?’ He also pointed to ‘minimal innovation (since Hyperliquid)’ and the destructive reflexivity of the recent ‘Solana casino massacre,’ fueled by platforms like Pump Fun and a memecoin supercycle that ultimately alienated sustainable capital. A critical supply-side issue exacerbates these problems: with 29.91 million cryptocurrencies tracked by CoinMarketCap, Krüger warned that ‘almost every coin in the top 200 is grossly overvalued’ amid a cycle of ‘never ending’ launches that ‘pump then dump to oblivion where only insiders profit.’

According to Krüger, these accumulating weaknesses set the stage for a macro trigger to harden the selloff. That trigger was the nomination of Kevin Warsh, who beat out other candidates for the role of next Federal Reserve chair. Krüger explained that the market ‘suddenly became deeply aware that Warsh is a strong advocate of a small balance sheet: goodbye Quantitative Easing (QE) and Yield Curve Control (YCC) dreams, hello Quantitative Tightening (QT) fears.’ This realization dashed hopes for future liquidity tailwinds that have historically buoyed risk assets like crypto, prompting a decisive downward re-rating.

The mechanical result was a market where ‘sellers [were] dumping more aggressively than usual on every pump,’ while ‘buyers not showing up to buy the dips as much any longer.’ Despite the bleak assessment, Krüger, who stressed he was describing past damage rather than forecasting the future, noted that market metrics like ‘volume, liquidations, implied volatility and options skew indicate that a local bottom is likely in.’ At press time, Bitcoin traded at $66,029, a level that may reflect this tentative stabilization.

The conversation among analysts is now pivoting toward crypto’s future utility in an AI-dominated cycle. Some users suggested the real upside lies in ‘agent stacks’ that could ‘manage crypto liquidity,’ positioning crypto’s rails as infrastructure for machine-to-machine value transfer. Krüger largely agreed with this asymmetric bet. ‘Reality is crypto can’t compete with AI. It’s impossible. But it could be used by AI,’ he wrote, calling the idea of ‘Agent-to-Agent payments’ on crypto rails ‘high quality hopium.’ This potential niche as foundational plumbing for an AI economy, rather than the primary speculative asset class, may define the next chapter for a market licking its wounds from a brutal downturn.