Risk-off sentiment swept across global markets as traders reacted to confirmation that Kevin Warsh will become the next chair of the Federal Reserve, triggering a sharp deleveraging wave in crypto. Bitcoin slipped below the key $80,000 level over the weekend, briefly touching $74,500 as fragile sentiment collided with persistent ETF outflows and tightening expectations. The move accelerated a broader unwind that spilled into equities and precious metals, with gold and silver extending steep pullbacks from recent highs.
QCP Asia said Bitcoin’s drop below technical support sparked more than $2.5 billion in liquidations of leveraged long positions, intensifying downside pressure across major assets. Ether fell below $2,170 while broader risk aversion pushed equities lower and dragged traditional havens deeper into retreat. Markets began pricing a higher probability of earlier policy normalization, weighing on non-yielding assets and amplifying volatility. Higher margin requirements in futures markets further accelerated the unwinding of leveraged positions.
Analyst PlanC argued that bitcoin’s weekend drop to around $77,000 may represent a capitulation-style low rather than the start of a prolonged downturn. He compared the move to past drawdowns that preceded major recoveries, including the 2018 bear market low, the March 2020 COVID crash, and the declines following the FTX and Terra-Luna collapses. He estimated the current cycle bottom likely sits between $75,000 and $80,000, suggesting a potential final shakeout within an ongoing bull cycle.
February opened with severe turbulence as crypto liquidation peaked at $2.56 billion on January 31, ranking among the largest wipeout days in history. Bitcoin slid to around $77,500 while Ethereum tumbled over 22% in a week to roughly $2,200. Gold dropped 4.5% today alone and more than 17% from recent highs, falling to $4,600 per ounce and erasing nearly $2 trillion in implied market cap. Total crypto market cap has shrunk by $800 billion since October, though charts show similarities to 2022 bottoming patterns.
