Overview of the Market Crash
The sell off began late on January 31, 2026, and continued into February 1, 2026. Bitcoin dropped from approximately $84,000 to a low near $75,644 on some exchanges, though most trading activity occurred in the $78,000–$79,000 range.
$84,000 ┤■■■■■■■■
$80,000 ┤■■■■■
$78,000 ┤■■■
$75,644 ┤■
Ethereum ( $ETH ) declined by roughly 12%, falling to around $2,395.
$2,700 ┤■■■■■■
$2,500 ┤■■■■
$2,395 ┤■■
Other major cryptocurrencies such as Solana (SOL), XRP, and BNB posted losses of 10% or more. Overall, the total cryptocurrency market capitalization fell by more than 6%, dropping to approximately $2.73 trillion.
Liquidation Breakdown
Total Liquidations: $1.6B–$1.8B
ETH ───────── $560M
BTC ──────── $481M–$793M
Others ─────── $400M+
During periods of intense selling, more than $100 billion was erased from the market within hours, with some reports estimating losses as high as $220 billion during peak sell offs
Liquidations and Forced Selling
Forced liquidations significantly worsened the downturn. Data indicates that more than $1.6 billion worth of leveraged positions were liquidated within 24 hours, with the vast majority coming from long positions.
Ethereum liquidations reached approximately $560 million
Bitcoin liquidations ranged between $481 million and $793 million, depending on the source
Other major altcoins followed with substantial losses
In total, over 300,000 traders had their positions forcibly closed. Because the crash occurred over the weekend, when liquidity is typically lower, even modest sell orders caused exaggerated price movements. Risk aversion increased rapidly, prompting panic selling.
Macroeconomic Concerns
Macroeconomic developments played a major role in triggering the sell off. President Donald Trump announced the nomination of Kevin Warsh as the next Chair of the U.S. Federal Reserve. Warsh is widely viewed as a monetary policy hawk, favoring tighter financial conditions, higher real interest rates, and reduced liquidity.
Markets interpreted this move as a signal that interest rates could remain elevated, potentially staying within the 3.5%–3.75% range for longer than expected. Higher interest rates tend to favor lower risk assets such as bonds while pressuring risk assets like cryptocurrencies.
At the same time, the U.S. dollar strengthened, which further weighed on dollar denominated assets such as Bitcoin. Bitcoin and Ethereum exchange traded funds (ETFs) recorded significant outflows, with more than $818 million withdrawn in a single day and nearly $1.5 billion over the course of a week.
Traditional markets were also under pressure. Technology stocks, as well as gold and silver, declined as investors shifted toward cash and safer assets. Bitcoin failed to behave as a safe haven and instead traded in line with other high risk assets.
Geopolitical Developments
Geopolitical tensions added to the risk-off sentiment. Reports of an explosion at a major port in Iran, escalating tensions in the Middle East, renewed U.S.–Iran friction, and continued strikes in Gaza heightened global uncertainty.
In the United States, delays in approving government funding led to a brief government shutdown, increasing political instability. Additionally, renewed discussions around new U.S. tariffs, including potential measures targeting Europe and other regions, raised concerns about global trade disruptions.
These developments discouraged risk-taking, and with reduced weekend trading activity, negative news had an outsized impact on crypto prices. Once again, Bitcoin and other digital assets failed to attract safe haven flows.
Internal Crypto Market Weaknesses
Structural issues within the crypto market amplified the sell-off. Many traders had entered highly leveraged long positions following strong gains earlier in the cycle. As prices began to fall, liquidation thresholds were triggered, forcing exchanges to sell assets automatically and accelerating the decline.
Reports estimate $1.6–$1.8 billion in total liquidations, mostly from long positions. Individual large liquidations, including a $13 million ETH position, contributed to sharp downward momentum.
Bitcoin also broke several key technical support levels, including $85,000 and $80,000, which triggered additional algorithmic and discretionary selling. Large holders reduced exposure, and institutional funds recorded losses even before liquidations intensified. Lower liquidity on some trading platforms further worsened volatility.
Conclusion
This crash was caused by economic fears, world tension, and heavy leverage. While painful, it cleared weak positions from the market. Long term players should stay calm, manage risk, and focus on strong fundamentals.