Bitcoin slid through one of the market's most-watched price markers on Thursday, briefly touching $58,000 before clawing back to just under $60,000. The damage was already done: the day's closing price landed below $60,000 for the first time since September 2024. The largest cryptocurrency is now down roughly 20% since May and has lost about half its value from a record near $126,000 set last October.

A risk-off day across markets

The drop did not happen in isolation. It came alongside a broad retreat from risk assets, the category of investments — stocks, crypto, high-yield debt — that tend to fall together when investors turn cautious. South Korea's Kospi index tumbled 9% and triggered its circuit-breakers, automatic trading halts meant to slow a panic, for the second time in a week. U.S. technology shares sold off in tandem.

Research firm QCP Capital told clients that inflation "remains the binding constraint" for risk assets, a reference to the Federal Reserve's recent decision to lift its 2026 inflation forecast and signal a tougher stance on interest rates. Higher-for-longer rates raise the appeal of safe assets like cash and government bonds, and dull demand for speculative ones like crypto.

A cascade of forced selling

The decline set off a chain reaction in the leveraged corners of the market. More than $1.1 billion in leveraged crypto positions were liquidated in 24 hours, the vast majority — roughly $875 million — being long bets that prices would rise. A liquidation is what happens when an exchange automatically closes a trader's position because their losses have exceeded the collateral, or margin, they put up to open it. Each forced sale adds to the downward pressure, feeding the next.

Spot Bitcoin exchange-traded funds — stock-exchange-listed vehicles that hold actual Bitcoin so investors can get exposure without managing a wallet — recorded their largest single-day outflow since late May, shedding about $691 million on Thursday. Net inflows into the funds over the past year have flattened to roughly zero for the first time since the products launched in 2024, a sign that the steady institutional buying that supported prices has stalled.

Adding to the unease was a large expiry of Bitcoin options, contracts that give a buyer the right, but not the obligation, to buy or sell at a set price by a set date. According to CoinDesk data, implied volatility — a gauge of how large a price swing the options market expects — jumped to its highest level since early June, and traders were paying a steep premium for puts, the contracts that pay off when prices fall, relative to calls.

Strategy loses its premium

The sell-off landed hardest on Strategy, the enterprise-software company turned Bitcoin-accumulation vehicle run by executive chairman Michael Saylor. The firm holds roughly $51 billion in Bitcoin, equal to about 4% of all coins that will ever exist.

Strategy's common shares fell to around $82, and its preferred shares — a class of stock known by the ticker STRC, designed to pay monthly dividends and originally sold at $100 — hit a record low near $71, trading about 26% below that face value. More telling, the company's enterprise mNAV slipped below 1.0 for the first time. The mNAV, or market-to-net-asset-value ratio, compares a company's entire market value to the worth of the Bitcoin on its books after subtracting debt and other obligations. A reading below 1 means investors value the whole enterprise at less than the Bitcoin it holds — the opposite of the premium they had long awarded Saylor's approach.

The worry, as Bitwise chief investment officer Matt Hougan put it to Fortune, is the risk of a forced sale: "People are worried that [STRC's downturn] is going to force Strategy to sell Bitcoin to raise cash, and that's creating a negative psychological environment." The company faces roughly $1.2 billion in annual dividend obligations on its preferred shares while holding about $1.4 billion in cash — a thin cushion if Bitcoin stays depressed.

Altcoins bear the brunt

Ether, the second-largest cryptocurrency, fell faster than Bitcoin, dropping about 5.6% to near $1,510 and extending a week-long rout. The slide pushed Ether's total market value below $185 billion, allowing Tether's dollar-pegged stablecoin to overtake it as the second-largest crypto asset at roughly $186 billion — a symbolic marker of investors fleeing toward assets designed to hold a steady value. XRP slid nearly 5% and Dogecoin fell about 3.8%, while Solana pared an early drop.

Analysts were divided on what comes next. Gabe Selby, head of research at CF Benchmarks, argued the pullback had reached familiar territory: "Bitcoin has pulled back into the $50,000 to $60,000 zone today, and if history is any guide, this is where buyers step in," he told CoinDesk. Others were more cautious, noting that derivatives positioning still pointed to further downside. With near-term direction uncertain, the one firm conclusion is that the easy, one-way buying of recent years has, for now, given way to a tougher market.