In early February, Bitcoin plummeted over 12% in a single day, briefly falling below $60,000, which is a 50% drop from its historical high. Major tokens like Ethereum and Solana also saw significant declines of over 10%, with nearly 580,000 investors facing liquidations totaling nearly $2.6 billion in just one day.
The crash was sudden. Bitcoin's price has dropped about 50% from its historical high set in October 2025, and the total market capitalization of cryptocurrencies has evaporated by over $1.2 trillion in four months. Alongside Bitcoin's decline, Ethereum fell below $1,800, with a maximum daily drop of nearly 20%; Solana dropped to $67.29, a decline of 28%.
1. Market Collapse
● From February 5 to 6, 2026, the cryptocurrency market experienced its most severe crash since 2024. Bitcoin fell below the key psychological levels of $70,000 and $60,000, hitting a low of $60,033.
● This price represents a drop of over 52% from the historical high set in October 2025, indicating that the market's gains have been completely wiped out. The speculative frenzy in cryptocurrencies triggered by Trump's election victory has completely collapsed. It wasn't just Bitcoin; the entire cryptocurrency market experienced a collective "avalanche." Major tokens like Ethereum, Solana, XRP, and DOGE saw declines generally exceeding 10%.
● More concerning is that the total market capitalization of cryptocurrencies shrank from a peak of $2.48 trillion to $1.27 trillion, evaporating over $1.2 trillion in four months, marking a historical record for market cap shrinkage.
2. Chain Reaction
High leverage has become a significant amplifier of this decline. The accumulated leverage risk in the market was concentrated and released in a short time, leading to a cascading effect of liquidations.
● According to CoinGlass data, in the last 24 hours, a total of 577,000 people in the global cryptocurrency market were liquidated, with a total liquidation amount of $2.596 billion. Among these, the liquidation amount for long positions reached $2.13 billion, accounting for over 80%, indicating excessive optimism in the market regarding continued price increases.
● This decline quickly transmitted to related listed companies and financial products. The world's largest Bitcoin treasury company, Strategy, reported a net loss of $12.4 billion in the fourth quarter due to the decline in the value of its Bitcoin holdings.
● As Bitcoin's price fell below $60,000, Strategy's unrealized losses on its holdings temporarily expanded to $10.16 billion, setting a new historical high.
3. Multiple Triggers
The significant drop in Bitcoin's price is not due to a single factor but rather a result of multiple negative factors resonating, including a deteriorating macro environment, a reversal in capital flows, a fragile market structure, and a collapse of narrative logic.
● On a macro level, U.S. President Trump nominated Kevin Warsh, who holds a "tapering before rate cuts" hawkish stance, as the Federal Reserve Chair, significantly exacerbating market liquidity concerns. Fears regarding the Fed's tapering directly suppressed the valuations of high-risk assets like cryptocurrencies.
● There has been a substantial reversal in capital flows. A report from CryptoQuant indicated that in 2026, U.S. spot Bitcoin ETFs have become net sellers, offloading 10,600 Bitcoins. This contrasts sharply with the same period in 2025, when these ETFs purchased over 46,000 Bitcoins.
● A Deutsche Bank survey also revealed that the cryptocurrency adoption rate among U.S. consumers has dropped from 17% in July 2025 to the current 12%, indicating a significant decline in retail participation.
4. Altcoin Predicament
● This decline has further exposed the vulnerability of the altcoin market. Cosmo Jiang, a general partner at Pantera Capital, pointed out that the non-Bitcoin token market has effectively been in a bear market since December 2024.
● He described the trend so far this year as a continuation of a "rolling bear market" across most altcoin markets. Notably, this cycle has exhibited characteristics of a "reverse altcoin season," which is starkly different from traditional patterns. Historically, altcoin seasons typically occur after Bitcoin rises, with funds rotating into altcoins, driving a general increase.
● However, the current cycle shows structural weakness and increasing differentiation among altcoins. CoinMarketCap's altcoin season index is only at 25 points, far below the threshold of 75 points.
5. Structural Cleanup
● Although the market crash is shocking, some professional investors believe it reflects a structural cleanup process in the market. Ray Hindi, co-founder of L1D AG, stated, "This decline also reflects a structural cleanup process in the market. This reshuffling helps eliminate excess and allows truly useful projects to stand out."
● The market is undergoing a healthy deleveraging process. Many themes related to traditional finance became noticeably overstretched and crowded during January, and the subsequent severe deleveraging and pullback will transmit shocks to the market.
● Joscha Kuplewatzky of Wintermute Ventures noted that the market may currently be in the late stages of the cycle, making it unsuitable for overall bets on altcoins outperforming. He believes that unless retail investors become active again, any rise is more likely to be short-term and sector-specific.
6. Future Outlook
The market has developed a serious divide regarding the future trajectory of Bitcoin and cryptocurrencies. The probability of Bitcoin dropping to $55,000 this year on the prediction platform Polymarket has risen to 74%.
● Citigroup has issued a winter warning for the cryptocurrency market. Their data shows that the current drop of 52% from historical highs is nearing the critical level for a cryptocurrency market winter. Historically, corrections exceeding this level have been accompanied by prolonged bear markets with significant declines.
● However, some analysts maintain a cautiously optimistic outlook. Ding Yuan, director of the New Fire Research Institute, believes that while bears currently dominate, extremely oversold technical indicators suggest a short-term need for recovery. Whether the market truly stops falling will require close attention to the capital flows of spot ETFs and the Coinbase premium index, which reflect real market demand and core trading sentiment among U.S. investors.
● Bo Tang, director of the Financial Research Institute at the Hong Kong University of Science and Technology, believes we are witnessing the end of an old era in the Bitcoin market and the difficult beginning of a new one. The significant drop in Bitcoin is not merely a technical correction but a signal of important changes in the market's internal structure.
The stock price of the well-known cryptocurrency company Strategy has fallen 17% alongside Bitcoin, and its Bitcoin reserves are nearing net debt levels. CEO Phong Le candidly told investors: "If Bitcoin's price drops by 90%, the company will no longer be able to use its Bitcoin reserves to repay convertible bonds."
In 2026, the U.S. Bitcoin spot ETF has shifted from being a net buyer to a net seller, offloading over 10,600 Bitcoins. Meanwhile, retail participation has significantly declined, and market liquidity continues to tighten.
Citigroup analysts have issued a warning that the current drop is nearing the critical level for a cryptocurrency market winter. Historically, corrections exceeding this level have been accompanied by prolonged bear markets with significant declines.
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