Cryptocurrencies are facing a broad market sell-off as a stronger-than-expected US jobs report pushed the 10-year Treasury yield higher, driving capital out of risk assets. At the same time, liquid capital is rotating rapidly toward upcoming artificial intelligence sector initial public offerings like OpenAI and SpaceX, reducing available liquidity within the digital asset ecosystem. Amid these macroeconomic conditions, Ether fell to a 13-month low of $1,540 on June 5, 2026.
The decline accelerated following widespread contagion fears across decentralized finance protocols. Panic spread through the market after Anthropic’s Opus 4.8 artificial intelligence model discovered a security vulnerability within the Zcash zero-knowledge pool on May 29. According to a market update published by Cointelegraph, investors withdrew capital from various smart contracts over fears that similar undetected code flaws could exist elsewhere.
Decentralized Finance Protocols Suffer Heavy Capital Outflows
Total Value Locked across top Ethereum protocols contracted sharply. The Spark protocol recorded a 50 percent drop in total value, while Ether.fi saw its locked assets fall by 49 percent. Other major applications faced similar drawdowns, with EigenCloud shedding 41 percent of its capital and KernelDAO dropping 39 percent, driving Ethereum’s total locked value to its lowest point since February 2024.
The spot market collapse triggered automatic liquidations across derivatives exchanges. Leveraged long positions suffered $1.28 billion in forced closures over a five-day period. Traders holding bullish Ether positions bore the brunt of the wipeout, accounting for more than $500 million in liquidations during a 48-hour window.
Bitcoin Breaks Support as Institutional Vehicles Drain
Bitcoin also succumbed to the downward pressure, breaking below its critical $60,000 support floor before stabilizing near $60,541. The premier cryptocurrency faces an ongoing 12-day streak of consecutive negative outflows from institutional spot Bitcoin exchange-traded funds. Additionally, corporate treasury changes contributed to the downside as MicroStrategy sold a portion of its digital asset holdings for the first time since 2022 to fulfill obligations related to its preferred stock coupons.
How the Zcash Vulnerability Alters Smart Contract Security
The discovery that a critical counterfeiting flaw existed undetected since 2022 undermines the fundamental security assumptions of privacy-focused networks. The immediate financial fallout extended to infrastructure firms like Cypherpunk Technologies, which saw its stock value drop by 47 percent following the initial Zcash disclosure. To prevent long-term token supply inflation, Zcash developers are officially weighing the creation of an entirely new shielded pool utilizing turnstile accounting to re-verify the supply.