Crypto Market Volatility Triggers $2.5 Billion in Bitcoin Liquidations
February 2, 2026 — Recent volatility in the cryptocurrency market has led to a substantial wave of bitcoin liquidations, totaling approximately $2.56 billion, as reported by data provider CoinGlass. The sell-off in cryptocurrencies followed a broad decline across other risk assets, including equities and precious metals, underscoring the crypto market’s growing sensitivity to risk-off investor sentiment.
Bitcoin’s Sharp Decline Amid Market Turmoil
Bitcoin, which had surged to record highs above $126,000 just days before, experienced a steep drop on Saturday, falling over 6% to a trading price near $78,396. This downturn intensified over the weekend, with trading volumes thinning and exacerbating downward price movements, according to a research note from Bitfinex analysts. The cryptocurrency’s price briefly dipped as low as $104,782 during the October 10-11 period, signaling a significant correction from its recent peaks.
Market Dynamics Behind the Liquidations
While the current bitcoin liquidation total is far below the unprecedented $19 billion wiped out during the market turmoil triggered by President Donald Trump’s previous trade-related announcements on China, experts highlight the continuing vulnerability of cryptocurrencies to external factors. Adam McCarthy, senior research analyst at Kaiko, a digital market data provider, noted that investors are reassessing their risk frameworks in light of recent market turbulence.
"The past few months have caused many to pause and rethink their approach to risk in this rapidly changing cryptocurrency environment," McCarthy explained.
Broader Market Concerns Impacting Crypto
The wider conflict in the markets is partly attributed to fresh concerns regarding the artificial intelligence (AI) trade, triggered by disappointing earnings reports from major tech players like Microsoft. On Wednesday, Microsoft reported revenue growth in its Azure cloud-computing division that barely surpassed expectations, leading to a 10% share price decline the following day. This raised doubts about the robustness of AI investment, contributing to investor jitters across sectors, including crypto.
In parallel, President Trump’s nomination of Kevin Warsh as Federal Reserve Chair has stoked expectations of a policy shift. Markets anticipate that Warsh will steer the Fed toward interest rate cuts combined with a more hawkish balance-sheet policy. This combination unsettled investors, causing a sharp sell-off in precious metals such as gold and silver on Friday. Silver suffered its worst daily loss on record, and gold endured its steepest single-day drop since 1983. Jim Ferraioli, director of crypto research and strategy at Charles Schwab’s Schwab Center for Financial Research, emphasized the external risks affecting bitcoin prices.
"The biggest risks to prices at these levels are largely external forces—whether a sharp rise in unemployment or deterioration in the AI trade," Ferraioli said.
Investor Sentiment and Market Outlook
David Morrison, senior market analyst at Trade Nation, suggested that the mounting pressures across markets provided investors with multiple reasons to reduce exposure and lighten positions.
"Investors were looking for an excuse to lighten up, and they finally got several," Morrison remarked.
The intersecting worries about technology growth prospects, Federal Reserve policy direction, and the fragile state of traditional safe havens like precious metals have collectively contributed to the heightened volatility experienced in cryptocurrencies recently.
As bitcoin and the broader crypto market navigate these challenging dynamics, market participants remain cautious. The current liquidation event serves as a reminder of cryptocurrency’s inherent risk and the impact macroeconomic factors can have on digital assets.
Reporting by Hannah Lang in New York; editing by Michelle Price and Diane Craft.