Bitcoin has experienced a severe flash crash, falling roughly 6% to 9% within 24 hours to trade near $78,566 as of February 1, 2026. This rapid decline triggered a massive leverage flush, liquidating over $1.6 billion in crypto positions across the market, with Bitcoin accounting for nearly half of those losses. The crash was primarily fueled by a "risk-off" wave following the nomination of former Federal Reserve Governor Kevin Warsh as the next Fed Chair, which sparked fears of aggressive monetary tightening.
Key Market Drivers
Fed Leadership Shock: The nomination of Kevin Warsh to succeed Jerome Powell has panicked markets. Warsh is perceived as a "hawkish" choice who may prioritize shrinking the Fed's balance sheet and tightening liquidity, which is historically bearish for speculative assets like BTC.
Massive Liquidations: Approximately 93% of the $1.68 billion in liquidations were long positions. This "mechanical breakdown" saw forced margin calls accelerate the selloff as liquidity vanished during low-volume weekend trading.
Geopolitical and Macro Tensions: Reports of an explosion at Iran's Bandar Abbas port and a brief U.S. government shutdown have driven investors away from risky assets toward a stronger U.S. dollar.
Institutional Outflows: Spot Bitcoin ETFs saw significant outflows of roughly $818 million, signaling a pause in institutional accumulation.
Critical Technical Levels to Watch
Immediate Support: Traders are monitoring the $77,000–$78,000 zone. A failure to hold here could expose the November 2025 low of approximately $80,400 or lower.
Resistance: To regain bullish momentum, Bitcoin must reclaim the $82,500 support-turned-resistance and ultimately move back above $90,000.
Sentiment: The "Fear & Greed Index" has plummeted to 16, indicating "extreme fear"—a level historically associated with market bottoms rather than further sustained crashes.