Published: Feb 01, 2026 at 16:15
The broader cryptocurrency market is enduring its most painful correction of the year.
Today, February 1, 2026, Bitcoin (BTC) slid sharply below the $80,000 support level for the first time since early 2025, reaching a local low of $75,700.
This move has triggered a “liquidation cascade,” wiping out roughly $1.6 billion in leveraged positions and erasing over $111 billion from the total crypto market capitalization in a single day.
The confluence of “bearish” factors
The selloff appears to be driven by a combination of internal fatigue and external macro pressures:
ETF inflow exhaustion
Analysts report that Bitcoin’s realized capitalization has flatlined, indicating that the massive institutional inflows seen in 2025 have finally stalled.
Geopolitical & macro uncertainty
The crash coincides with a looming U.S. Government Shutdown and mounting uncertainty over the Federal Reserve’s next move. Moreover, President Donald Trump’s nomination of Kevin Warsh to replace Jerome Powell as the Chair of the Federal Reserve became a catalits to multiple actions on the markets.
Markets perceive Warsh as a “hard-line hawk” on inflation. His advocacy for a smaller Fed balance sheet and potentially higher-for-longer interest rates immediately strengthened the U.S. Dollar Index (DXY).
Thinning liquidity
With “new money” sitting on the sidelines, long-term holders have begun taking profits, creating a supply-demand imbalance that current buyer depth cannot support.
Its not only about crypto
The precious metals market has just experienced a historic “bloodbath.” After a parabolic start to 2026 that saw gold and silver hit all-time highs, the market underwent a violent correction over the final days of January, continuing into February 1, 2026.
Gold
Currently trading around $4,890/oz, down from a record peak of nearly $5,600/oz set on January 29. On Friday, January 30, gold recorded its largest one-day percentage drop in over 40 years (approx. 12%).
Silver
Trading near $85/oz, a staggering crash from its recent high of $121/oz. Silver suffered its worst single-day decline in history, plummeting roughly 30% in a 48-hour window.
The sudden reversal was not caused by a single event, but rather a “perfect storm” of fundamental and technical factors, somehow similar to what we see on the cryptocurrency market today.
Prior to the crash, the market had reached a state of “peak euphoria.” Gold had gained nearly 30% and silver 70% in the month of January alone. Technical indicators, such as the Relative Strength Index (RSI), showed both metals were deep in overbought territory. Institutional investors and “whales” began aggressive profit-booking, which triggered a cascade of automatic stop-loss orders and the liquidation of leveraged long positions.
As changes are coming in the Federal Reserve and since precious metals do not provide yield, a stronger dollar and higher rate expectations make them significantly less attractive.
Institutional resilience?
Despite the price drop putting some recent institutional entries temporarily underwater, the market remains focused on the long-term “Strategic Reserve” narrative. While the “up-only” euphoria of late 2025 has evaporated, industry leaders suggest that this correction is a necessary “cleansing” of excessive leverage before the next leg of the cycle can begin.
While the short-term correction is brutal, many analysts believe the structural bull market remains intact. Geopolitical instability, global de-dollarization trends, and massive industrial demand for AI data centers and solar energy continue to provide a long-term floor.
Disclaimer. This analysis and forecast are the personal opinions of the author. The data provided is collected by the author and is not sponsored by any company or token developer. This is not a recommendation to buy or sell cryptocurrency and should not be viewed as an endorsement by Coinidol.com. Readers should do their research before investing in funds.
Cointelegraph.