Bitcoin and Ethereum entered February 2026 under sustained bearish pressure, confronting one of their most extended downturns since the post-2018 crypto winter. Bitcoin’s slide below $76,000 marked a decisive break from 2025 highs, while Ethereum’s struggle to hold the $3,000 threshold underscored broader fragility across digital assets. Unlike past crashes triggered by macro shocks or systemic failures, the current drawdown reflects a structural unwinding of excessive leverage, muted risk appetite, and capital rotation toward defensive assets. With over $2.5 billion liquidated in days, crypto markets now face a critical test of confidence, liquidity, and technical support.

Bitcoin Enters Its Longest Monthly Decline Since 2018

Bitcoin’s price action in early February 2026 reflects a market caught in a prolonged phase of erosion rather than outright panic. The digital asset fell below $76,000 on January 31, extending a decline of roughly 40% from its 2025 peak and revisiting price territory last observed in April 2025. More notably, Bitcoin has now recorded four consecutive monthly declines of nearly 11%, its longest losing streak in over seven years.

The drop below $80,000—first breached during thin weekend liquidity—has shifted attention squarely to the April 2025 low near $74,500, which now functions as the market’s most consequential technical support. A decisive break below that level would represent not merely a retracement, but a structural failure of the prior bullish cycle.

What distinguishes this downturn from previous crypto crashes is its subdued character. There has been no singular macro shock, regulatory bombshell, or exchange failure. Instead, the selloff has unfolded amid buyer fatigue and fading conviction, with market participants reluctant to step in despite periodic risk rallies across global equities.

Still, optimism has not entirely vanished. Select technical models suggest Bitcoin could rebound toward $84,923 by February 3, with more aggressive forecasts pointing to a potential recovery toward $104,370 before month-end—provided liquidity conditions stabilize and forced selling abates.

Ethereum Struggles to Defend the $3,000 Threshold

Ethereum’s performance has mirrored Bitcoin’s malaise, albeit with added vulnerability stemming from weaker institutional inflows. Trading largely within the $2,690–$3,000 range, Ether has posted a modest 1.34% month-to-date gain through late January, a rebound too shallow to meaningfully reverse its broader downtrend. At the time of publication, ETH was trading at $2,318 and had touched intraday low at $2,278. Clearly, many supports have been broken in ETH and Solana. Both these coins have also traded significant part of the weekend in lower ranges.

Support near $2,690 had earlier merged as the immediate line of defense, with price action suggesting hesitation rather than accumulation. ETF participation—often viewed as a stabilizing force—has remained lackluster, depriving Ethereum of the sustained bid required to reestablish momentum. Today, ETH was again looking weaker compared to BTC. During sell-offs, usually Bitcoin remains stronger compared to altcoins.

Like Bitcoin, Ethereum has struggled to distance itself from the slump that began in October. The absence of decisive upside follow-through has reinforced the perception that recent gains represent technical pauses rather than a renewed bullish phase.

Liquidations Expose Structural Fragility Across Crypto Markets

The most visible manifestation of the downturn has been the scale of forced liquidations. Over $2.5 billion in leveraged positions were wiped out in a matter of days, underscoring the degree to which speculative excess had accumulated beneath the surface.

Ethereum accounted for approximately $1.14 billion in liquidations, nearly half of the total, while Bitcoin positions contributed roughly $765 million. The global crypto market capitalization now stands at $2.62 trillion, down 0.45%, with 24-hour trading volume at $136.87 billion.

These figures point to a market attempting—so far unsuccessfully—to halt a three-month losing streak. Sentiment remains cautious, with capital flowing selectively rather than indiscriminately back into digital assets.

Excessive Leverage: The Primary Catalyst Behind the Crash

At the core of the selloff lies an extended period of leverage accumulation across derivatives markets. Funding rates had remained persistently positive for weeks, signaling that traders were overwhelmingly positioned on the long side, often with aggressive leverage ratios.

When prices began to decline, margin thresholds were breached en masse, triggering forced liquidations that compounded selling pressure. Each liquidation pushed prices lower, activating additional stop-outs in a cascading feedback loop.

Of the more than $2.5 billion liquidated, approximately $2.41 billion originated from long positions alone. The exchange Hyperliquid emerged as the epicenter of the event, accounting for $598 million in forced closures, with more than 94% tied to bullish bets. Analysts ranked the episode as the 10th-largest liquidation event in crypto history.

Market observers described the episode as “entirely a liquidity situation”, rather than a reflection of deteriorating fundamentals. Data identified three distinct liquidation waves totaling roughly $1.3 billion within just 12 hours, highlighting the speed at which leverage can destabilize prices.

Macro Pressures Amplify Risk Aversion

While leverage provided the spark, broader macroeconomic conditions supplied the accelerant. Several external pressures converged to weaken risk appetite across digital assets:

ETF Outflows: Roughly $1.5 billion exited U.S. spot Bitcoin ETFs in the week preceding the crash, while Ethereum ETFs shed $327 million, signaling institutional retrenchment.

Government Shutdown Anxiety: Uncertainty surrounding a potential U.S. government shutdown—later confirmed as a partial shutdown—added to short-term volatility.

AI Bubble Concerns: Rising skepticism around artificial intelligence valuations resurfaced, prompting broader reassessments of speculative assets.

Macroeconomic Headwinds: Persistent inflation fears and the prospect of renewed central bank tightening pushed investors toward traditional safe havens, including government bonds and gold, draining liquidity from crypto markets.

DeepSeek and the Lingering Shadow of AI-Driven Volatility

Although not a direct catalyst in the current downturn, the memory of prior AI-related shocks continues to shape market psychology. In January 2025, the release of the DeepSeek AI model triggered a sharp selloff, with Bitcoin falling 6.5% below $100,000 and nearly $300 billion erased from the crypto market in days.

That episode established a lasting sensitivity to AI-driven narratives, a dynamic that has carried into 2025–2026. Investors remain wary of abrupt sentiment shifts tied to technological exuberance, reinforcing a more defensive posture during periods of uncertainty.

Further Sell-off Can Lead to Confidence Loss Among Long Term Holders

The current crypto drawdown underscores a critical lesson: market structure matters as much as narrative. Excessive leverage, when left unchecked, can overwhelm even resilient long-term theses.

For investor-minded participants:

Monitor leverage metrics and funding rates as early warning indicators

Treat support levels near $74,500 for Bitcoin and $2,690 for Ethereum as decisive inflection points

Expect selective, liquidity-driven rebounds rather than broad-based recoveries

Recognize that confidence—not catalysts—will ultimately determine the market’s next phase

Until leverage normalizes and capital flows stabilize, crypto markets are likely to remain volatile, range-bound, and highly sensitive to shifts in macro sentiment.