Today, February 2nd, 2026, the crypto world is waking up with a familiar, sinking feeling. The king of digital currency, Bitcoin, is in a painful stumble. After a weekend that felt like a non-stop slide, it’s now trading around $78,845. That’s a big deal because it’s the first time it’s slipped below the $80,000 mark since last April. To really feel the sting, remember this: just last October, Bitcoin was soaring at an incredible peak above $126,000. Now, it’s down over 12% in a single week. That kind of drop isn’t just numbers on a screen; it’s hundreds of billions of dollars in value, vanished. For everyone from everyday investors to big institutions who jumped in during the good times, this is a harsh reminder of crypto’s wild ride.
Why Bitcoin Is Crashing
So, what flipped the switch? It started with a wave of nervousness washing over global markets. With geopolitical tensions simmering, the mood shifted to “risk-off,” meaning investors began pulling money out of volatile bets like tech stocks and, of course, crypto. But in the crypto world, trouble never stays simple. This anxiety triggered a brutal chain reaction.
The real accelerator was leverage. Think of it like people betting big with borrowed money. As Bitcoin started to fall and crossed below key psychological levels like $80,000, it set off alarm bells in automated trading systems. These systems, trying to limit losses, started forcibly selling the holdings of those over-leveraged traders. This created a vicious cycle: forced selling pushed the price down further, which triggered more forced selling. Since last Thursday, over $2 billion worth of these leveraged Bitcoin positions have been wiped out. It’s a classic, painful crypto spiral where the market essentially starts eating itself.
Factors Behind the Decline
Digging deeper, several heavyweights are hanging on Bitcoin’s back. First, there’s uncertainty about the future of money in the U.S. President Trump’s pick of Kevin Warsh—seen as a hawk—to lead the Federal Reserve has people worried about tighter, tougher financial conditions ahead.
Second, Bitcoin’s “digital gold” story took a hit. When traditional safe havens like gold and silver themselves wobbled last Friday, Bitcoin didn’t stand strong. It fell with them, making some investors question its role as a shelter from storms.
Finally, the conviction seems to be fading. The U.S. spot Bitcoin ETFs, which were huge channels for mainstream money, are now seeing money flow out. Nearly $1.7 billion has left these funds in two weeks. When this key source of institutional demand dries up, a major pillar holding up the market’s price is suddenly gone.
Crypto Market Collapses Together
One brutal lesson from this mess is that in a panic, there’s no hiding spot in crypto. When Bitcoin sneezes, the entire market catches a cold. Ethereum is down about 7% today, Solana and Cardano are tumbling similarly. It doesn’t matter if a project has a great use case right now; almost everything is painted red. This shows that during a Bitcoin-led crash, diversifying across crypto doesn’t offer much protection. Instead of shifting to other digital coins, scared traders are rushing into stablecoins—the dollar-pegged tokens that act like cash within the crypto world. It’s a clear sign that right now, big-picture fear and sentiment, not individual project news, are calling all the shots.
What Comes Next for Bitcoin?
So, where do we go from here? The experts are split. Some see a glimmer of hope, suggesting a possible bottom could form between $70,000 and $73,000. They point to the overwhelming “extreme fear” in the market, which sometimes sets the stage for a bounce back.
But others sound a more cautious alarm. They warn this could just be the opening act of a longer, drawn-out downturn. Bitcoin is already in its longest monthly losing streak in years, and history shows these crypto winters can last many months. Everyone’s eyes are glued to the $80,000 level—can Bitcoin claw its way back above it? If not, the next major test could be lower, around $70,000. Traders are also watching for a potential “dead cat bounce”—a temporary, deceptive recovery that tricks people before another fall. The advice from the trenches is unanimous: in times like these, be very careful trying to catch a falling knife.