 ▲ Bitcoin plunge |
Bitcoin (BTC) slumped to the $60,000 level due to five overlapping factors—including leverage liquidations and the bursting of an artificial intelligence (AI) bubble—rather than a single adverse event. While there was no specific trigger such as the Terra-Luna collapse or the FTX bankruptcy, analysts say the market is facing broad-based downward pressure amid selling by miners and even fears surrounding quantum computing.
According to DL News on February 6 (local time), Matthew Sigel, Head of Digital Asset Research at VanEck, cited a large-scale deleveraging in the futures market as the primary driver of Bitcoin’s sharp decline. CoinGlass data show that Bitcoin futures open interest fell sharply from about $61 billion last week to $49 billion, a drop of more than 20%. This represents a decline of over 45% from the early-October peak of $90 billion. Sigel explained that falling prices accompanied by leverage liquidations indicate that excess froth is being squeezed out of the market.
The second factor was selling by miners as enthusiasm around the AI theme cooled. Many mining companies pivoted toward high-performance computing to ride the AI boom, but growing doubts about profitability relative to infrastructure investment and a tighter funding environment forced their hand. As a result, miners sold their Bitcoin holdings on the spot market to secure operating funds and defend their balance sheets, adding further downward pressure in an already weak market.
Governance uncertainty and technological fears also weighed on investor sentiment. News that the Trump family’s World Liberty Finance project sold equity to investors linked to the United Arab Emirates reignited transparency concerns. Sigel argued that standardized disclosure requirements, such as those proposed in the U.S. crypto market structure bill known as the Clarity Act, are needed to address such issues. Additionally, worries spread that quantum computing could potentially break Bitcoin’s cryptography and threaten 20% to 50% of all coins, although, ironically, quantum-computing-related stocks also fell in tandem with Bitcoin.
Finally, investor psychology tied to Bitcoin’s four-year cycle played a role. The familiar pattern of post-halving rallies, profit-taking, and subsequent bear markets has become a powerful psychological anchor. Sigel interpreted the current decline as a typical phase in the transition from a market top to a bottom, consistent with past cycles.
Despite Bitcoin being surrounded by five headwinds, Sigel emphasized that the current environment could present an opportunity. Considering the scale of the price correction and the extent of the leverage reset, he assessed that Bitcoin’s attractiveness has increased for investors with a one- to two-year time horizon. Sigel also revealed that he added to his spot Bitcoin holdings that day, signaling confidence in a market recovery.
*Disclaimer: This article is for investment reference only, and no responsibility is assumed for investment losses based on it. The content should be interpreted solely for informational purposes.*