Bitcoin Plummets, Driving $2 Trillion Tumble in Crypto Market Value
By Gertrude Chavez-Dreyfuss, Rae Wee, Amanda Cooper, Reuters
Published February 6, 2026 6:02am
NEW YORK/SINGAPORE/LONDON – Bitcoin saw a sharp plunge on Thursday, accelerating a broader downturn in the cryptocurrency market fueled by weakening risk appetite. The decline has been influenced by volatility in precious metals markets and a widespread selloff in technology stocks.
Bitcoin, the world’s largest cryptocurrency, dropped to a low of $63,295.74—its weakest level since October 2024, just prior to former Republican U.S. presidential candidate Donald Trump’s victory and his campaign promises to support cryptocurrencies. At the time of reporting, Bitcoin was down 12.6% at $63,525, headed for its largest single-day percentage drop since November 2022. According to data from CoinGlass, approximately $1 billion worth of Bitcoin positions have been liquidated over the past 24 hours alone.
This selloff has contributed to a significant loss in the overall cryptocurrency market capitalization, which has shrunk by $2 trillion since reaching a peak of $4.379 trillion in early October 2025, based on CoinGecko data. Notably, the last month has seen $800 billion wiped out of the market.
Bitcoin’s weekly losses now total 17%, with a 28% decline year-to-date. Ethereum (Ether), the second-largest cryptocurrency by market value, also suffered heavy losses, falling over 13% to $1,854 late Thursday. Ethereum has declined 19% this week and nearly 38% in 2026. The negative sentiment toward cryptocurrencies comes in the wake of increased volatility in metals such as gold and silver, driven by leveraged buying and speculative trading. Silver prices plunged by as much as 18% to $72.21. Concurrently, key U.S. stock indexes showed weakness; the S&P 500 fell to a seven-week low while the Nasdaq recorded its lowest level in more than two months, amid fading enthusiasm for the artificial intelligence sector.
Nic Puckrin, investment analyst and co-founder of Coin Bureau, commented on the state of the market: “It’s clear the crypto market is now in full capitulation mode. If previous cycles are anything to go by, this is no longer a short-term correction but rather a transition from distribution to reset — and these typically take months, not weeks.”
The fallout has extended beyond token prices, impacting shares of companies holding Bitcoin and other digital assets, heightening concerns that the market turmoil may spread through the broader financial ecosystem.
Another factor contributing to the crypto market’s decline is political uncertainty related to U.S. monetary policy. President Trump’s selection of Kevin Warsh as the next Federal Reserve Chair has unsettled investors. Analysts anticipate Warsh could pursue a policy to shrink the Federal Reserve’s balance sheet, removing liquidity that has previously supported speculative assets like cryptocurrencies.
Manuel Villegas Franceschi of Julius Baer explained, “The market fears a hawk with him. A smaller balance sheet is not going to provide any tailwinds for crypto.”
Crypto markets have already faced struggles since last October’s historic crash, which was triggered by the forced liquidation of leveraged positions. Investor appetite for digital assets has weakened significantly, with sentiment remaining fragile.
Deutsche Bank analysts pointed to ongoing institutional withdrawals as a key driver of the broader decline. “Massive withdrawals from institutional ETFs (exchange-traded funds) have been occurring since the October 2025 downturn,” they said. U.S. spot Bitcoin ETFs experienced outflows exceeding $3 billion in January, following $2 billion and $7 billion in outflows during December and November, respectively.
“This steady selling, in our view, signals that traditional investors are losing interest, and overall pessimism about crypto is growing,” the analysts added.
Bitcoin’s performance remains closely tied to the broader technology sector, often buoyed by enthusiasm for artificial intelligence. However, the recent selloff in global software stocks has intensified pressure on Bitcoin, Ethereum, and other tokens.
Jefferies strategist Mohit Kumar warned about further downside risks: “Concerns are being raised around the crypto miners and whether we could be looking at forced liquidations if prices continue to fall, which could lead to a vicious cycle.”
Kumar emphasized the need for caution among investors, stating, “Our view on crypto has always been that it should be no more than a very small portion of the overall portfolio. However, it is also an asset class heavily owned by retail investors, and hence adds to the overall market risk.”
As regulatory, political, and market uncertainties converge, the cryptocurrency sector faces challenging times ahead, with investors closely monitoring developments that may determine the trajectory of digital assets in the months to come.
— Reuters
Tags: bitcoin, crypto
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