Ether falls twice as hard as bitcoin and HYPE drops 10% as the chip trade unwinds

A significant sell-off in Asian semiconductor stocks, particularly in Japan’s Nikkei 225 and Taiwan Semiconductor, has spilled over into cryptocurrency markets, dragging major digital assets lower on Friday. Ether (ETH) was hit hardest among the leading tokens, falling about 4% to $1,850, which was twice the decline experienced by bitcoin. Despite this drop, ether remains up 4% over the past seven sessions and benefited from nearly $97 million of inflows into U.S. spot ether ETFs earlier in the week, predominantly into BlackRock’s funds. Other tokens such as hyperliquid's HYPE, Solana, XRP, and BNB also declined, with HYPE seeing the steepest fall of 10% for the day and 12% for the week.

The sell-off was triggered by a pullback in semiconductor stocks across Asia, with MSCI's Asia Pacific equities index dropping 3%, Japan’s Nikkei 225 falling 5%, and Taiwan Semiconductor marking its largest single-day drop since April 2025. This correction came after a strong rally driven by optimism around artificial intelligence, leading investors to question whether the AI-related market advances were overextended. The weakness in chip stocks seemed to be the primary catalyst for the broad retreat in high-growth assets, including cryptocurrencies.

Market observers, including Wintermute’s OTC desk, view the recent declines more as a period of consolidation beneath key resistance levels rather than a confirmed trend reversal in crypto markets. Onchain data from Glassnode has yet to signal a definitive downturn, and sentiment indicators such as the Fear and Greed Index remain in extreme fear territory at 25. Bitcoin demonstrated relative resilience, falling just 2% and maintaining a stronger position compared to other tokens, though it also struggled to break the $65,000 resistance level.

Meanwhile, oil prices diverged sharply from equities and crypto, with Brent crude jumping about 12% on the week to around $85 per barrel. This surge reflects escalating geopolitical tensions in the Middle East, including ongoing U.S. strikes in Iran and disruptions in shipping through the Strait of Hormuz. The rise in oil prices is fueling inflation concerns that earlier economic data had temporarily eased, adding another layer of uncertainty for risk-sensitive markets like cryptocurrencies.

Overall, the correction in semiconductors and the resultant crypto sell-off highlight the interconnectedness of tech sectors and digital assets, with investors now reevaluating the pace of recent bullish trends. While ether’s ETF inflows suggest underlying interest remains strong, persistent geopolitical risks and inflation worries could continue to weigh on market sentiment and introduce volatility in the near term.