Bitcoin Crash Accelerates as Investors Flee Risky Assets
By Allie Canal and Steve Kopack, NBC News
Updated Feb. 5, 2026, 4:34 PM EST
The plunge in Bitcoin’s value intensified on Thursday, as the world’s largest cryptocurrency dropped more than 12% to trade below $64,000 in late afternoon trading—levels not seen since October 2024. This steep decline highlights the vulnerability of cryptocurrencies when investors seek to reduce risk amid mounting economic uncertainties.
A Sharp Turnaround from Record Highs
Bitcoin’s sudden loss marks a harsh reversal from its late-2025 surge, when it reached unprecedented heights above $125,000 per coin. Over the past four months, the digital currency has surrendered nearly half its value. According to data from CoinMarketCap, Bitcoin has lost over $1.2 trillion in market value since hitting its October 6 peak.
The selloff in cryptocurrencies coincides with a broader investor retreat from riskier asset classes such as tech stocks and digital assets. Instead, many are shifting their capital into traditional "safe haven" investments, including gold, Treasury bonds, and stocks in Europe and Asia.
Diverging Paths: Bitcoin vs. Gold
Since Bitcoin’s peak last year, the contrast between its performance and that of gold has grown strikingly wide. By Thursday afternoon, Bitcoin had fallen approximately 35% since February 2025, while gold’s value soared by nearly 70%. This year alone, gold’s price has increased more than 11%, compared to Bitcoin’s decline of over 26%.
The U.S. Dollar and Geopolitical Pressures
The retreat from cryptocurrencies has also put pressure on the U.S. dollar, as investors reevaluate their portfolios amid renewed trade and tariff threats from the Trump administration. Heightened geopolitical tensions—including disputes with U.S. allies over Greenland, protests in Iran, and the early January capture of Venezuela’s president—are fueling uncertainty. This unstable environment is driving many investors toward more secure assets.
Impact on the Crypto Industry and Corporate Holders
Bitcoin is widely regarded as "digital gold," perceived by many as a reliable store of value in times of market stress—similar to physical gold. However, the current slump is challenging this image and sending ripples throughout the broader cryptocurrency ecosystem.
According to analysts at Citi, inflows into Bitcoin exchange-traded funds (ETFs) have dried up amid the price slide. These ETFs had previously supported Bitcoin’s rise in 2025. Citi notes that many U.S. spot Bitcoin ETF investors are now underwater, with the average entry price estimated at about $81,600—well above current prices.
The decline has also hurt companies heavily invested in Bitcoin. Strategy, the largest corporate holder of Bitcoin, saw its shares plunge over 17% on Thursday as Bitcoin’s price fell below the average amount the company paid for its sizable holdings. Strategy owns more than 713,000 Bitcoins, having paid an average of around $76,000 per coin. With Bitcoin trading significantly lower, investors are increasingly concerned about potential further losses.
Other crypto-linked companies also experienced declines, including Coinbase, a leading U.S. crypto exchange; Circle, a crypto-focused financial services firm and stablecoin issuer; and Robinhood, a popular retail trading platform.
Warnings from Prominent Investors
Michael Burry, famous for profiting from the 2008 housing market crash and portrayed in The Big Short, issued stark warnings about Bitcoin’s prospects. He described the current market downturn as dragging “sickening scenarios” closer to reality and cautioned via his Substack that Bitcoin’s selloff could spiral into a "death spiral."
Uncertainty in Washington and Regulatory Challenges
The evolving political landscape is further impacting market dynamics. Former Federal Reserve Governor Kevin Warsh was nominated by President Trump to be Fed chair, signaling a potential shift toward a tougher stance on inflation, despite Trump’s calls for lower interest rates. Market watchers expect Warsh to resist quick rate cuts, which traditionally support higher-risk investments such as cryptocurrencies.
Meanwhile, Treasury Secretary Scott Bessent recently stated that the U.S. government lacks the authority to intervene in the event of a cryptocurrency market crash, reducing hopes for a federal bailout even from a crypto-friendly administration.
On the regulatory front, progress on crypto legislation has been slow and uneven. Though Congress has advanced measures to clarify digital asset regulations and oversee stablecoins, broader rules needed to establish market structure and investor protections remain stalled. Analysts at Citi suggest that even with clearer regulations, significant investor caution may persist due to the inherent volatility of cryptocurrencies.
Louis Navellier, an investment manager and market strategist, remarked that "many investors may still be cautious about putting money into such a volatile asset class," regardless of potential regulatory clarity.
As Bitcoin faces renewed selling pressure and uncertainty mounts across markets and regulators, investors continue to weigh the risks of exposure to the volatile cryptocurrency sector amid a shifting global economic landscape.