 ▲ Bitcoin (BTC), investors, crash / AI-generated image |
Bitcoin (BTC) suffered a historic crash as it faced a massive wave of sell orders just ahead of the landmark $100,000 level, wiping out approximately $12 billion worth of positions in an instant.
According to Fortune, a leading U.S. business magazine, on February 7 (local time), the primary cause of the plunge was identified as record-breaking forced liquidations in the futures market. When Bitcoin failed in its attempt to break through the psychologically significant $100,000 resistance, long positions held by investors who had bet on further price increases using excessive leverage collapsed in a domino effect. Data from cryptocurrency analytics firm Coinglass shows that more than $12 billion was liquidated across the market in a single day, marking one of the worst liquidation events in recent years.
Market experts diagnosed the incident as a textbook example of a long squeeze. As Bitcoin prices consolidated near their peak and a small downward pressure emerged, automated sell orders in the futures market were triggered, setting off a vicious cycle that pushed prices even lower. Losses were particularly severe among retail investors who had borrowed aggressively on optimism that Bitcoin would surpass $100,000.
The crash was amplified as inflows of institutional capital through spot Bitcoin ETFs temporarily slowed. Taking advantage of weaker buying momentum from major asset managers such as BlackRock, speculative traders unleashed large-scale profit-taking sell orders, further intensifying market anxiety. In this process, Bitcoin fell nearly 10% from its peak, spreading fears among investors of a potential bubble burst.
Warning signs also emerged despite the rosy outlook that had persisted since the launch of the Donald Trump administration. While institutional support measures such as the U.S. crypto market structure legislation (CLARITY) are anticipated, critics argue that excessive market greed had outpaced these policy tailwinds. Experts noted that although the mass liquidation may serve as a self-correcting mechanism to cool an overheated market, extreme price volatility appears unavoidable in the short term.
The digital asset market is currently in the process of absorbing the $12 billion liquidation shock while testing key support levels. Some view the clearing of massive positions as an improvement in market fundamentals, but it is expected to take time for damaged investor sentiment to recover. Investors are advised to remain cautious, consider the possibility of further declines, and carefully assess potential trend reversals from a higher time-frame perspective.
*Disclaimer: This article is for investment reference only, and no responsibility is taken for any investment losses incurred based on this information. The content should be interpreted solely for informational purposes.*