The cryptocurrency sector is enduring a painful repeat of history. Following a significant rally in October 2025, a severe collapse has erased billions in market value within days, evoking memories of the FTX disaster. Investor sentiment has cratered, and the market’s future now hinges on whether crucial support levels can withstand intense selling pressure or if a bear market is set to reclaim control.
A Perfect Storm of Macro and Regulatory Fears
This dramatic downturn stems from a confluence of regulatory uncertainty and macroeconomic headwinds. A key catalyst was the definitive rejection of federal bailouts for the sector by U.S. Treasury Secretary Bessent. This statement accelerated Bitcoin’s descent from the $80,000 range into the $60,000s.
Simultaneously, capital is fleeing the market at a notable pace. Spot Bitcoin ETFs witnessed outflows exceeding $1.5 billion in a single week, marking a stark reversal from the inflows seen the previous year. Further pressure comes from a steadfast Federal Reserve holding interest rates steady, coupled with geopolitical tensions that are driving investors toward traditional safe havens like gold, which has hit new record highs while Bitcoin stumbles.
Liquidation Carnage and Technical Breakdown
The first week of February 2026 delivered a devastating blow. Bitcoin’s price was hammered, shedding nearly 30% of its value in that week alone. This extreme volatility triggered a chain reaction across derivatives markets: leveraged positions worth over $16 billion were forcibly liquidated in a mere ten-day span. The pain was concentrated on bullish traders, with a staggering 93% of these liquidations hitting long positions.
Should investors sell immediately? Or is it worth buying Bitcoin?
Currently, Bitcoin is trading at $70,316.00. While this places it modestly above recent lows, the digital asset remains down more than 20% since the start of the year. It now sits approximately 44% below its 52-week high of around $124,000.
Extreme Fear Meets Cautious Accumulation
Market psychology vividly reflects the price destruction. The Crypto Fear & Greed Index has plummeted to a reading of 9, indicating “Extreme Fear” and reaching its lowest point since the Terra collapse in June 2022. From a technical perspective, Bitcoin flashed a major warning signal by falling below its 365-day moving average for the first time in nearly four years.
Despite the prevailing panic, subtle signs of potential stabilization are emerging. On-chain data reveals that some large-scale investors are using the depressed prices as an entry point. One notable transaction involved the movement of over $100 million worth of Bitcoin from the Binance exchange to private wallets. Historically, such accumulation during periods of peak fear has often preceded a market bottom.
All Eyes on Inflation Data
The immediate direction for Bitcoin will likely be determined by the U.S. Consumer Price Index (CPI) data release scheduled for the week of February 10-16. These figures are critical for shaping expectations around the Federal Reserve’s interest rate policy. The market outlook is sharply divided: while optimists at Standard Chartered maintain a year-end price target of $150,000, analysts at Stifel warn of a potential drop to $38,000 should inflation data disappoint and push back the timeline for anticipated rate cuts.
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