Bitcoin Crash 2026: What Triggered the 52% Sell-Off and What Happens Next

‍

Key Takeaways

‍

• Bitcoin crashed over 52% from its October 2025 all-time high of ~$126,000, dropping as low as ~$60,000 on February 6, 2026.
  
  
• The crash was triggered by a tech stock sell-off, unwinding of leveraged positions, and massive ETF outflows, not a crypto-specific failure.
  
  
• Over $3 billion in spot Bitcoin ETF outflows in January 2026 alone removed a major source of buying pressure.
  
  
• Analysts at Stifel estimate Bitcoin could bottom around $38,000 based on past "super-bear" patterns, while others expect a bounce from the $65,000–$70,000 zone.
  
  
• This is Bitcoin's third 30%+ correction since the post-FTX bear market lows, but the first driven entirely by macroeconomic conditions.
  
  

The Crash Timeline

‍

Bitcoin's path from record high to multi-year low played out over roughly four months.

‍

On October 6, 2025, Bitcoin hit $126,198 on CoinMarketCap, its all-time high, driven by strong ETF inflows, three Fed rate cuts, and favorable regulation. Then things started unraveling.

‍

Late October brought a U.S.-China tariff escalation that punished risk assets across the board. Bitcoin began sliding. By November, it had its worst monthly performance since mid-2021, landing in the $80,000–$90,000 range.

‍

December and January saw continued bleeding. ETF outflows accelerated, roughly $7 billion in

November, $2 billion in December, and over $3 billion in January, according to Deutsche Bank research.

‍

The floor gave way in early February. On February 2, Bitcoin fell below $80,000 for the first time since April 2025, touching $74,876. By February 5, it had broken $72,000. On February 6, the worst single day, Bitcoin plunged 15% to a low near $60,000, marking its lowest price since October 2024.

‍

The bounce was equally violent. By February 7, Bitcoin had clawed back above $70,000, closing over 11% higher on the day.

‍

What Caused the Bitcoin Crash?

‍

The crash wasn't about a broken protocol, exchange collapse, or fraud. It was a macro-driven liquidation event with several compounding factors.

‍

Tech stock contagion. Microsoft's disappointing earnings triggered a sell-off in tech names that cascaded into crypto. The Nasdaq dropped sharply, and Bitcoin, increasingly correlated with risk-on equities, followed.

‍

Silver crash. On January 31, silver plummeted 30% in its worst day since 1980. Gold also declined. The breakdown in precious metals eliminated one of the last perceived safe-haven trades, and the negative sentiment spilled into crypto.

‍

ETF mechanics turned against Bitcoin. Spot Bitcoin ETFs now hold roughly 6% of all Bitcoin in existence. When investors redeem shares, authorized participants must sell actual Bitcoin into the market, mechanically, with no discretion. On February 3 alone, U.S. Bitcoin ETFs saw $272 million in net outflows.

‍

Leveraged blowup. One theory, put forward by former equities trader Parker White, points to HongKong hedge funds that had levered up on BlackRock's IBIT call options using borrowed capital in Japanese yen. When Bitcoin weakened, their positions were liquidated in a cascading fashion. Coinglass data showed over $2 billion in liquidations during the week.

‍

Basis trade collapse. Hedge funds running cash-and-carry arbitrage between spot Bitcoin and CME futures saw annual returns fall from 17% to below 5%. With the arbitrage opportunity gone, they unwound positions, selling spot Bitcoin in the process.

‍

Policy headwinds. The Federal Reserve held rates unchanged in January, and Trump's appointment of Kevin Warsh as the new Fed Chair added uncertainty. Analysts at Kaiko noted that these two events together "constituted a true turning point" for the acceleration of the decline.

‍

How This Crash Compares to Previous Ones

‍

Bitcoin has crashed before — multiple times.

‍

The 2014 Mt. Gox hack triggered a sustained decline. The 2018 correction brought a 74% drawdown as the ICO bubble popped. The 2022 crash delivered a 77% peak-to-trough decline following Terra/Luna and FTX.

‍

What makes the 2025–2026 crash different is the structural context. As BTG Advisory research noted, the October peak of $126,000 arrived exactly 1,064 days after the November 2022 cycle low, the same interval that separated the 2017 and 2021 peaks from their preceding lows. If this pattern holds, Bitcoin could bottom around October 2026.

‍

The nature of the selling is also different. Previous crashes were retail-led. This one has been institutional. ETF flows, basis trade unwinds, and forced liquidations through futures and options created a structurally different kind of sell pressure.

‍

Barry Bannister at Stifel calculated a potential bottom around $38,000, based on historical "super-bear" patterns. Bitcoin has declined 70% peak-to-trough in multiple past cycles. A 70% drop from $126,000 would put it near $38,000.

‍

On the other side, the presence of ETF infrastructure and institutional capital provides a potential floor that didn't exist in prior crashes. Spot Bitcoin ETFs attracted $26 billion in net inflows during 2025, creating structural long-only demand.

‍

What Comes Next?

‍

The crypto market is split.

‍

Bears point to continued ETF outflows, fading institutional interest, and the possibility that the four-year cycle is playing out exactly as it has before. If that's the case, more downside lies ahead.

‍

Bulls argue that the crash was driven by temporary macro factors, the tech sell-off, silver crash, and Yen carry trade unwind, and that once these resolve, Bitcoin's supply-demand dynamics remain favorable. Only 21 million Bitcoin will ever exist, the April 2024 halving cut new supply in half, and long-term holders continue to accumulate.

‍

For those looking to track the situation or buy during the dip, Backpack Exchange offers real-time market data, spot Bitcoin trading with maker fees as low as 0.02%, and the security of a VARA-regulated platform with full proof of reserves. The exchange supports both limit orders (for buying at specific price targets) and market orders for immediate execution.

‍

Learn more about Backpack

Exchange | Wallet | Twitter | Discord

‍

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Backpack. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Backpack is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice.

‍

‍