 ▲ Bitcoin (BTC) decline/AI-generated image |
The price of Bitcoin (BTC) has plunged below $60,000, roughly half of its all-time high, causing the core values that had been supporting the market to collapse all at once.
According to cryptocurrency-focused media outlet Cointelegraph on February 7 (local time), Bitcoin recently fell below the psychologically significant resistance level of $60,000 before rebounding to around $70,000. After peaking at $126,000 on October 12 last year, its value has evaporated by half in just a few months. Market experts are presenting three key hypotheses for this crash, warning of cracks in the market structure that go beyond a simple price correction.
The first is the collapse of the “digital gold” narrative that viewed Bitcoin as a safe-haven asset. Although the price of physical gold has been hitting new highs daily amid escalating geopolitical tensions, Bitcoin instead moved in tandem with technology stocks and declined alongside them. Analysts suggest that as investors’ belief that Bitcoin would preserve value in times of crisis has been shaken, its nature as a risk asset has become more pronounced.
The second factor is the large-scale withdrawal of institutional capital. More than $2 billion has flowed out over the past month from institutional funds that had entered through spot Bitcoin ETFs, amplifying the decline. Contrary to expectations that long-term institutional money would act as a price buffer, institutional sell-offs have instead returned like a boomerang, further increasing volatility.
Finally, the forced liquidation of excessive leveraged positions pressed the accelerator on the downturn. In the past 24 hours alone, liquidations totaling approximately $2.67 billion occurred, with $2.31 billion attributed to long positions that were betting on price increases. As key support levels collapsed in rapid succession, the market is assessed to have entered a self-reinforcing downward phase marked by a flood of forced selling.
Market sentiment has frozen as the Crypto Fear and Greed Index plunged to 5, signaling extreme fear. The rally momentum that had formed on expectations surrounding the launch of the Donald Trump administration is widely viewed as having effectively dissipated amid concerns over external tariff policies. As investors increasingly prioritize capital preservation over bargain hunting, additional downward pressure is expected to persist for the time being.
*Disclaimer: This article is for investment reference only, and no responsibility is taken for investment losses based on its content. The information provided should be interpreted solely for informational purposes.*