Geopolitical tensions, institutional selling from firms like BlackRock, statements from U.S. Politicians and a widespread risk-off sentiment are contributing to downward pressure on Bitcoin, resulting in a more than 50% decline over the past four months.
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As of 9:20 PM on Thursday, February 5, 2026, Bitcoin was trading at $60,074, a decrease of 17.43% in a single day. Looking back four months – since October 6, 2025, when Bitcoin reached its last all-time high of $126,198.07 – the decline exceeds 50%.
According to data from CoinMarketCap, the recent drop is primarily attributable to the reduction of leverage in long positions, with $1.23 billion in Bitcoin liquidations (80% long positions) forcing rapid selling. These liquidations occur when the price falls to a point where collateral is insufficient to cover losses for investors who borrowed funds from an exchange, triggering automatic sales to settle the debt.
These mass sales stem from a generalized risk-off sentiment, linked to economic and political events. A recent regulatory statement from the U.S. Department of the Treasury contributed to the downturn. Institutional confidence was further weakened by comments from U.S. Treasury Secretary Scott Bessent, who ruled out government or bank bailouts for cryptocurrencies.
This refusal to provide a safety net influenced more cautious investors and triggered a wave of institutional selling, exacerbating the existing downward trend.
Connection to Political and Economic Context
Experts agree that the massive liquidations are linked to the political and economic landscape. Financial analyst Mariel Lang Saez stated, “The 50% correction isn’t a crypto anomaly. It’s macro amplified.” According to the analyst, unlike previous cycles, Bitcoin is now integrated into the traditional financial system, meaning the same ETFs and institutional flows that drove the historic high of $126,000 are now accelerating the decline when risk appetite contracts.
Julián Colombo, Bitso’s Director for South America, added several contextual factors similarly influencing Bitcoin’s decline:
— “On one hand, crypto regulation faces certain internal tensions in the United States, as banks and traditional financial system actors are delaying implementation. Added to Here’s the extensive discussion surrounding the Clarity Act, legislation regulating the general aspects of crypto assets in the country. All of this, along with uncertainty about U.S. Economic indicators and other global impacts, such as the possible intervention of the Japanese yen, contributes to driving the fall.”
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Carolina Gama, Bitget’s Country Manager for Argentina, explained that Bitcoin has become more correlated with traditional markets, particularly the S&P 500 and technology stocks.
— “Its performance has largely responded to the tone of the Federal Reserve (Fed): although there have been interest rate cuts in late 2025 – from 4.25% to 3.50% and then to 3.75% – communication has remained cautious, moderating risk appetite. More than a negative sign, this reflects that Bitcoin has been incorporated as an asset within the institutional investment universe, unlike the bubble it existed in until recently, with no connection to the financial market in general.”
Why did Bitcoin fall so much?
Following the record high in late 2025, when it reached its all-time peak, subsequent months have brought an increasingly steep decline. The October peak lasted only four days. On October 10th, Trump announced 100% tariffs on China and the “digital gold” fell from $122,000 to $104,782 in a matter of hours.
According to Lang Saez, $19.13 billion in leveraged positions were liquidated that day – ten to twenty times more than during the Covid-19 pandemic or the FTX collapse – becoming the largest deleveraging event in cryptocurrency history.
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Lang Saez added that the Fed cut interest rates three times in 2025 – but Federal Reserve Chairman Jerome Powell indicated on January 28th that there was no rush for further reductions. Global liquidity has worsened, traditionally leading many investors to seek refuge in assets considered less risky. The tariffs imposed by Trump caused institutional capital to prefer gold as a safe haven, rather than the digital asset.
Despite this, the sharp retraction of the asset in just four months does not worry those who have long bet on “digital gold”:
— “For those with patience and a long-term vision, Bitcoin remains an excellent investment option,” affirms Gama, explaining that despite short-term volatility, the asset maintains solid fundamentals.
At the same time, she points out that “this type of correction is not uncommon in the Bitcoin cycle, as there were declines of 93% in 2011, 84% in 2015, 83% in 2018 and 76% in 2022, followed by significant recoveries.”
Bitcoin behaves in cycles
Colombo explains that Bitcoin typically behaves in cycles, with periods of decline and others of growth, adding that after a peak, the asset usually reduces its value until it finds a point of resistance, something that, in his opinion, has not yet consolidated. He also highlights an important detail:
— “This Bitcoin cycle has a particularity: unlike others, which were more focused on retail or individual investors, this one is more institutional, which means that political factors also weigh heavily, driven mainly by decisions from the U.S., both in terms of regulation and other aspects of Donald Trump’s government.”
At Bitget, the recent drop in Bitcoin is also interpreted more as a phase of market readjustment than as a structural collapse. The company agrees with Colombo in pointing out that part of the immediate pressure comes from institutional sales: spot Bitcoin ETFs in the U.S. Have recorded relevant outflows since October, with more than $7 billion in November, about $2 billion in December and more than $3 billion in January. Gama explains that this has reduced liquidity and left the asset more exposed to abrupt movements in the short term.
At the same time, Lang Saez warns that despite the outflows, “ETFs still hold 1.27 million Bitcoins, only 5% below the maximum. The long-term institutional base has not been dismantled. They are at a loss, but they haven’t left.” In fact, she highlights that about 200 publicly traded companies purchased approximately $96 billion in Bitcoin throughout 2025.
Even as the price is experiencing a deep correction in the short term, many analysts continue to see Bitcoin as an asset whose strength lies, above all, in the long term.
— Corrections are cyclical and healthy. If we look at its evolution over the last 10 years, We see an asset that has been able to appreciate consistently — concludes Colombo.
