Crypto markets are experiencing a downturn with total market capitalization dropping 2.4% in the past 24 hours to $3.68 trillion, marking a painful 12.9% weekly decline. This comes as financial tightening pressure ripples across the U.S. financial system, leading to reduced liquidity and impacting high-risk assets. The SOFR–EFFR spread widened to 0.19, its sharpest level since late 2024, suggesting rising short-term funding costs for banks. This week, banks borrowed $6.75 billion from the Fed’s repo facility, a level not seen outside of quarter-end stress events since 2020, indicating broader financial strain. As investors react to these developments by scaling back exposure across crypto, equities, and tech, caution is replacing risk appetite.