The world’s leading cryptocurrency is navigating a challenging period, marked by its longest monthly losing streak since the 2018 bear market. A confluence of factors—from stressed miners to capital flight from key investment products—is testing the market’s resilience. The critical question is whether Bitcoin can establish a floor near recent lows or if a new wave of selling is imminent.
Macro Headwinds and Investment Product Redemptions
Broader financial conditions are applying pressure. Market analysts point to a “hawkish shock” influencing risk assets, including digital currencies. This sentiment shift followed the nomination of a new Federal Reserve chair alongside a Producer Price Index reading that exceeded forecasts.
Simultaneously, a significant withdrawal of capital from U.S. spot Bitcoin ETFs is adding to the downward momentum. Data from SoSoValue recorded a single-day outflow of $509.7 million on January 30. Notably, BlackRock’s fund alone saw outflows of $528.3 million. The current price sits below the average cost basis for these ETF holdings, meaning many typical ETF investors are facing unrealized losses, which can incentivize further selling.
Corporate holdings are also feeling the pinch. Strategy, formerly known as MicroStrategy, saw the value of its substantial Bitcoin treasury dip below its average acquisition cost of $76,037 per coin. With holdings of 712,647 BTC, this translates to paper losses exceeding $900 million.
Mining Sector Approaches a Critical Threshold
Perhaps the most acute stress is visible in the mining industry. Key profitability metrics have deteriorated sharply. The Miner Profit and Loss Sustainability Index plummeted to 21, its lowest point since November 2024, according to a January 31 report. Daily mining revenues collapsed from approximately $45 million to around $28 million in just a few days.
The cost structure for operators is becoming untenable. Data from Antpool indicates the shutdown price for many Antminer S21 models—the point at which mining becomes unprofitable—lies between $69,000 and $74,000 per Bitcoin. At an electricity cost of $0.08 per kWh, the profit margin for some miners is vanishing.
Operational disruptions have compounded the problem. A severe winter storm in the eastern United States forced several large-scale miners to curtail operations in late January. Since November 11, the network’s total hashrate has fallen by roughly 12%, representing the most significant drop since China’s mining ban in 2021. At the peak, production from publicly listed miners fell from 77 BTC per day to just 28.
Should investors sell immediately? Or is it worth buying Bitcoin?
Key Mining Sector Stress Points:
* Profitability at a multi-month low (Index at 21)
* Machine shutdown zone: $69,000–$74,000
* Network hashrate decline: ~12% since November
* High liquidations amplify selling pressure
Deteriorating Sentiment Meets Thin Market Liquidity
Market psychology has turned decidedly negative. The widely watched Fear & Greed Index has fallen into the “Extreme Fear” range, registering between 14 and 18. This suggests a broad-based risk aversion among participants, which typically undermines the sustainability of price recoveries.
This psychological shift is occurring in a market with structural fragility. Analysis from Kaiko shows market depth is more than 30% below its October peak. In practical terms, fewer buy and sell orders are resting on exchanges, meaning larger trades can move the price more easily. This illiquidity increases the risk of rapid, exaggerated downward moves.
The situation was exacerbated on January 30 by a cascade of forced selling. Over $2.2 billion worth of leveraged cryptocurrency positions were liquidated within 24 hours, with long bets bearing the brunt of the losses.
Potential for Short-Term Relief
A single source of potential near-term relief is embedded in Bitcoin’s protocol. The next mining difficulty adjustment, expected between February 8 and 10, is projected to decrease by approximately 14–18%. Such a decline would meaningfully improve the economics for remaining miners, potentially alleviating some sector-specific selling pressure.
The market has already priced in considerable pessimism, with Bitcoin touching a 52-week low of $76,143 on February 4. Whether the anticipated easing in mining difficulty will be sufficient to stabilize prices remains uncertain. The ultimate direction will likely be determined by the interplay of continued ETF fund flows and the broader macroeconomic landscape in the days ahead.
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