Bitcoin's downfall in February 2026 can be attributed to several factors. The cryptocurrency experienced a sharp decline, plunging 14% on February 5, 2026, marking its most severe drop since the FTX collapse in 2022.
One major reason for the decline was the rise of "bitcoin treasury" corporates, firms that hold massive bitcoin positions and operate as leveraged proxies on the asset. When the market turned, these structures became accelerants, pressuring sentiment, triggering risk controls, and potentially forcing capital raises or changes in strategy.
Another factor contributing to the decline was the increase in liquidations and forced sellers taking over. Once key levels broke, the market's plumbing did what it always does in crypto: leverage amplified the downside. Approximately $2.56 billion in bitcoin liquidations occurred over a recent volatility wave, as selling pressure spilled across risk assets.
The crypto market's downturn was also attributed to a broader shift to "risk-off" conditions, where investors became more cautious and hesitant to invest in riskier assets. This shift was triggered by various factors, including the hawkish Fed nomination, strengthening the dollar and pressuring assets that trade like duration.
Analysts pointed to the 200-day moving average, currently around $58,000 to $60,000, as a potential support level to watch. Some predicted that if Bitcoin failed to hold its current levels, it could lead to a further decline, potentially targeting the $60,000 zone or even lower.
In summary, the downfall of Bitcoin in February 2026 was caused by a combination of factors, including the rise of "bitcoin treasury" corporates, increased liquidations and forced selling, and a broader shift to "risk-off" conditions. These factors contributed to a perfect storm that led to a significant decline in Bitcoin's value.