ETF funds have been flowing out for consecutive days! Bitcoin drops to $77,000, and the crypto market faces a critical stress test

Bitcoin falls below $80,000 triggering $1.7 billion in chain liquidations, ETF net outflows intertwined with macroeconomic impacts, market enters extreme fear testing bottom key data imminent.

Psychological threshold broken, Bitcoin drops below $80,000 triggering chain liquidations

The cryptocurrency market experienced a severe blow in early 2026. Bitcoin ($BTC) saw intense volatility on February 2, not only breaking the psychological support level of $80,000 but also plunging to around $75,000, hitting the lowest level this year. This decline wiped out over 10% of its market cap within just a few hours, causing Bitcoin to fall below the $80,000 mark for the first time since April 2025. As of the time of writing, Bitcoin’s price is $77,584.

Image source: CoinGecko Bitcoin not only broke the $80,000 psychological support but also briefly dipped to the $75,000 range, marking the lowest since the start of the year.

According to CoinGecko data, Bitcoin once touched $75,800, a price that even briefly fell below the average cost basis of MicroStrategy, the largest corporate holder, at $76,037, sparking market anxiety over potential liquidations of “inventory companies” or worsening financing conditions.

This sharp decline was not an isolated event but evolved into a full-market “mass exodus.” Ethereum ($ETH) dropped to 2,387 points on Saturday afternoon, a single-day decline of over 11%, while major tokens like Solana ($SOL), Cardano ($ADA), and Binance Coin ($BNB) also recorded significant drops ranging from 6% to 17%.

According to CoinGlass statistics, during this wave of decline, total on-chain liquidations reached $1.7 billion, with approximately 245,000 traders forced to liquidate, most of whom held long positions optimistic about the future. This “de-leveraging” crash evaporated over $100 billion in market value within just 5 hours, reflecting an extremely fragile market structure lacking spot support.

Geopolitical, Fed personnel, and US debt crisis intertwined

Analysts point out that this market crash resulted from multiple negative factors resonating together. First, geopolitical risks escalated sharply. Explosions at Bandar Abbas port in Iran, along with ongoing tensions between Israel and Iran, severely impacted investor risk appetite. Although Bitcoin has traditionally been viewed as a safe haven, during this crisis, its “hedging properties” seemed to have completely failed, with its price reaction even less stable than traditional gold. Additionally, parts of the US experienced severe winter storms, leading to large-scale reductions in operations by miners in Texas and other regions. Bitcoin hashrate saw its largest decline since 2021, further shaking confidence in network security budgets.

Macroeconomic policy uncertainties also heavily contributed to the market downturn. US President Trump nominated Kevin Warsh as the next Federal Reserve Chair, widely interpreted as a potential shift back to a hawkish stance. Warsh has previously advocated reducing the Fed’s balance sheet and strengthening monetary discipline, which is undoubtedly bad news for crypto assets relying on liquidity injections.

Meanwhile, the US federal government faced a partial shutdown due to Congress failing to pass appropriations bills. Political deadlock caused significant volatility in traditional financial markets, with gold prices experiencing their largest single-day drop in 46 years, forcing many investors to sell crypto assets to cover losses elsewhere.

Bitcoin spot ETF records net outflows

As a main driver of this bull market, US Bitcoin spot ETFs have now become a heavy burden on the market. According to Farside data, spot ETFs entered a massive withdrawal phase at the end of January, with a single-day net outflow of up to $817 million on January 30, seven to eight times the daily average. Among them, BlackRock’s IBIT performed the worst, with a single-day outflow of $528 million, followed by Fidelity’s FBTC and Grayscale’s GBTC. This “massive capital withdrawal” indicates that institutional investors are rapidly reducing risk exposure amid macroeconomic risks, causing the spot market to lose its most critical marginal buyers.

Image source: Farside Bitcoin spot ETF experienced a massive withdrawal phase at the end of January, with a single-day net outflow of $817 million, seven to eight times the usual daily volume.

Ethereum spot ETF also saw outflows, with about $253 million leaving in one day. As ETF channels shift toward net supply rather than net demand, retail buying reliance increases. However, under the “extreme fear” sentiment, willingness to buy is clearly lacking. More concerning is that the derivatives market is currently in “backwardation,” meaning spot prices are below futures prices, indicating a highly tight supply-demand situation in the short term. The selling pressure is mainly driven by derivatives, and this structural imbalance often triggers larger-scale technical sell-offs.

Mining ecosystem evolution and market bottom prediction

Behind the price collapse, the underlying Bitcoin ecosystem is undergoing profound changes. Currently, miners’ revenue structure is heavily dependent on new coin issuance, with transaction fees accounting for only 0.7% of total revenue, indicating that the fee market is essentially “missing,” making it difficult to sustain long-term network security budgets.

To survive, large mining companies like TeraWulf and Riot are shifting capacity toward AI and high-performance computing (HPC) hosting, attempting to diversify income streams to buffer against Bitcoin price volatility. This shift means miners’ sensitivity to Bitcoin prices is different from the past; they may be more inclined to mechanically sell Bitcoin to raise operational funds rather than holding tokens through cycles.

For the future, analysts are divided. Renowned anonymous analyst PlanC believes that the $75,000 to $80,000 range could be the “deepest correction opportunity” in this bull cycle, with strong potential for bottoming.

However, veteran trader Peter Brandt warns that Bitcoin could further decline to $60,000 in Q3 2026. Currently, the crypto fear and greed index has fallen to 16, the lowest since the start of the year, indicating market sentiment has hit rock bottom. Investors are closely watching upcoming US ISM manufacturing index and employment data in February, which will be key indicators to determine whether the crypto market can stabilize below $80,000.