Bitcoin’s price experienced a sharp decline between February 5th and 6th, 2026, falling to $60,000 and triggering concern among investors globally.
The significant drop on February 5th resulted in a record $3.2 billion – approximately 100 billion baht – in realized losses for Bitcoin investment accounts. This downturn underscores the inherent volatility within the cryptocurrency market.
Data from Glassnode indicates that entity-adjusted realized losses reached $3.2 billion during the market’s downward trend last week. This metric specifically tracks the U.S. Dollar value of coins transferred for sale at a loss compared to their original purchase price, excluding internal transfers between the same entities.
The cumulative losses surpassed those seen during the substantial Bitcoin decline of 2022, which recorded $2.7 billion in losses during the collapse of LUNA.
According to platform Checkonchain, “the Bitcoin sell-off last week qualifies as a capitulation event according to the textbook. It happened quickly, with high trading volume, and represented actual losses from the least confident holders.”
Cryptomind Sees Support at $55,800, Bitcoin’s Average Cost Basis
Sanchai Popli, Chief Executive Officer and Co-founder of Cryptomind Advisory Co., Ltd., questioned via his personal X account, “What caused Bitcoin to fall so much? Are we now in a bear market? And how far will it fall?”
1. 10/10 Liquidation Event
The events of October 10th saw investors globally liquidated for a total of $20 billion. This is the official figure, but the reality may be much higher, meaning many retail investors who recently entered the market disappeared along with the market liquidity.
More concerning is that this occurred just six days after Bitcoin reached a new all-time high. This serves as a crucial lesson for the crypto market: greed often comes with fear. When the market rises significantly, everyone starts using high leverage, hoping for quick profits, but that leverage becomes a double-edged sword when the market reverses.
2. Fed Policy & Kevin Warsh
Although the Fed has stopped quantitative tightening (QT) and begun Reserve Management Purchases, which are a form of quantitative easing (QE), the latest FOMC meeting revealed that the Fed now views the risks in the labor market as equal to the risks of inflation.
the Fed decided to maintain the federal funds rate at 3.50-3.75%. Looking at the Reserve Balance of the U.S. Federal Reserve, it has fallen to below $3 trillion, even after three consecutive weeks of expanding the balance sheet.
Kevin Warsh, nominated to succeed Jerome Powell as the next Federal Reserve Chairman in May, has previously expressed the view that the Fed’s balance sheet is too large, causing market concern that if Warsh becomes Chairman, the balance sheet will shrink further.
This matters to Bitcoin as, in the past, Bitcoin’s movements have correlated with the size of the Fed’s balance sheet. When the Fed prints money, Bitcoin rises; when the Fed reduces its balance sheet, Bitcoin falls.
3. Finish of Cheap Money from Japan
Japan has long been a source of cheap money globally, with very low interest rates. Global investors have borrowed yen to leverage investments in various markets, known as the Yen Carry Trade.
However, in January, Japan began to shift direction, announcing increased government spending, stimulating domestic investment, and planning tax cuts. Japan is transitioning into an era of increased money usage, causing Japanese government bond yields to surge and the yen to strengthen.
Many investors who engaged in highly leveraged Yen Carry Trades were forced to add collateral or face margin calls, leading them to sell assets, including Bitcoin. The already limited system liquidity was further reduced.
4. Institutional Risk-Off
The aforementioned factors have prompted institutional investors and ETFs to reduce risk, or “risk-off.” This not only removes buying pressure but also creates substantial selling pressure on Bitcoin’s structure.
5. Where Will Bitcoin Fall To?
Cryptomind Advisory data indicates immediate support around $66,900 – $70,600. However, caution is advised around $70,000 – $80,000, where new investors entered the market recently. If $66,900 fails to hold, the final support level is the Realized Price, or the average cost basis of all Bitcoin in the market, at $55,800.
At the Realized Price, the current bear market should bottom out, and long-term investors are likely to start buying again.
However, the price around the Realized Price will not immediately bounce back.
Historically, Bitcoin tends to fluctuate around that level for a while, building a price base before rebounding.
Binance TH Believes Bitcoin Has Not Entered a Permanent Downtrend
Dr. Korn Poonsiriwong, Chief Strategy Officer and Director of Project BINANCE TH Academy at BINANCE TH by Gulf Binance (BINANCE TH), revealed that a systematic assessment suggests this correction may not reflect structural problems with Bitcoin, but rather fear and uncertainty surrounding macroeconomic monetary policy.
The key question is, what are the markets afraid of? The answer isn’t short-term economic figures, but ‘policy uncertainty,’ particularly news regarding a change in the U.S. Federal Reserve Chairman, as the market is pricing in the possibility that a new Chairman may adopt a more hawkish monetary policy.
Kevin Warsh is one name frequently mentioned, viewed as a staunch advocate for fighting inflation, opposed to loose monetary policy (QE), and unfriendly to short-term risky assets.
This fear has led many institutional investors to reduce risk in advance, selling volatile assets like technology stocks and crypto, and shifting funds to U.S. Treasury bonds and other safe-haven assets. This isn’t a flight to safety, but a portfolio adjustment during a period of unclear direction.
Another factor exacerbating the market is the revaluation of technology stocks. In 2025, technology, AI, and space stocks were valued based on expected revenues over the next 2–3 years. As policy trends shift, these valuations are being adjusted downward.
However, structurally, this event differs significantly from past crises like the collapse of FTX or LUNA. There is no systemic collapse, no liquidity problems throughout the system, and no misuse of customer funds. Global liquidity remains in the system, as the Fed’s quantitative tightening (QT) halted last year, and the M2 money supply continues to increase.
Fundamentally, Bitcoin hasn’t changed. The network continues to function as intended, ETFs continue to hold Bitcoin, and companies like MicroStrategy have no short-term debt obligations. The risk the market is concerned about is ‘fear of the unknown’ rather than actual problems.
the sharp and rapid decline in Bitcoin’s price doesn’t signal a permanent downtrend, but reflects a period of uncertainty where investors necessitate more clarity on policy. Once the narrative surrounding the Fed and monetary policy direction stabilizes, the market has the potential to recover quickly. For long-term investors, this correction may not be the end of Bitcoin, but a test of discipline and perspective during a period of market fear.
Image: Thomas Fuller/NurPhoto via Getty Images
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