Bitcoin Slides Into the Mid-$60,000s as Forced Liquidations and Risk-Off Trading Hit Crypto Again

Bitcoin extended a sharp early-February selloff on Thursday, February 5, 2026, dropping into the mid-$60,000 range and briefly probing the low-$60,000s as leverage unwound across the crypto complex. The move has spilled into major altcoins and crypto-linked equities, turning what started as a pullback into a broader confidence test for a market that had been leaning heavily on fresh inflows and momentum.

A Deleveraging Wave, Not a Single Headline

The day’s price action has the fingerprints of forced selling: rapid intraday drops, thin bounces, and cascades that typically follow when leveraged positions get closed automatically. In recent sessions, derivatives markets have seen heavy liquidation activity, with long positions taking the brunt as prices slipped through key levels that traders had been defending.

That matters because leverage can create “air pockets.” Once price falls far enough to trigger margin calls and liquidation engines, selling becomes mechanical rather than discretionary—pushing prices down faster than spot buyers can step in.

ETFs and “Mechanical Selling” Add to the Pressure

A second accelerant has been fund flow dynamics. Spot Bitcoin ETFs have grown into a major transmission channel between traditional risk sentiment and crypto price action. When investors redeem shares and net outflows rise, the resulting rebalancing can translate into direct selling of bitcoin in the market.

In recent days, the market has been grappling with reports of substantial ETF outflows alongside declining risk appetite. The combination is especially potent during fast selloffs: outflows weaken the bid, while liquidations increase the offer.

Macro Fears Are Back in the Driver’s Seat

Crypto has traded less like an idiosyncratic asset and more like a high-beta risk proxy during this slide. The downturn has coincided with broader unease across risk assets, including tech-heavy sectors, as investors reassess the outlook for rates and growth.

A market that’s pricing tighter financial conditions tends to punish assets with longer-duration narratives—exactly the category many investors place crypto in. As rate expectations move, the hurdle for holding volatile assets rises, and positioning that looked manageable in a calm tape can become fragile quickly.

The “Trump-Rally” Giveback and a Fragile Demand Base

The decline is also a referendum on how durable last year’s demand proved to be. Bitcoin’s prior surge attracted newer cohorts of buyers, including retail participants and mainstream allocators who may be less tolerant of deep drawdowns. When the market turns, these marginal holders often become the first to reduce exposure—especially if they entered near recent highs.

This is the vulnerability of momentum-driven rallies: if incremental buyers step away, the market can feel like it’s “missing a bid” until price falls far enough to entice longer-term capital.

What’s Still Unclear

Several key questions will shape whether this is a sharp reset or the start of a longer downcycle:

• How persistent are spot Bitcoin ETF outflows, and are they broad-based or concentrated in a few vehicles?

• Are long-term holders accumulating into weakness, or is distribution starting to show up on-chain and in exchange flows?

• How stressed are major leveraged venues—are liquidations tapering, or do they re-accelerate on the next leg down?

• Are miners and other structurally long participants becoming forced sellers if prices stay depressed?

• Does broader risk sentiment stabilize, particularly in tech and other growth-sensitive pockets?

What Happens Next: Scenarios Traders Are Watching

• Stabilization above a major round-number level: If bitcoin holds and reclaims nearby resistance quickly, it would signal liquidation pressure is fading and spot demand is returning.

• Another liquidation flush: A decisive break to fresh lows—especially on rising volume—could trigger a second wave of forced selling and push prices down rapidly before a base forms.

• ETF-flow driven grind lower: If outflows persist without a sharp panic, prices can drift downward in a choppy, demoralizing tape as rallies get sold.

• Risk-on relief rally: A shift in macro tone—cooling rate fears or a rebound in tech—could lift crypto broadly, even without crypto-specific catalysts.

• Policy and regulatory catalysts matter again: Any concrete movement on U.S. crypto legislation or enforcement posture could quickly reprice risk, but timing remains uncertain.

Why This Drop Matters Beyond Bitcoin

This selloff is testing the post-ETF era of crypto. The market is more integrated with traditional finance than in prior cycles, which can deepen liquidity but also import volatility from macro and equity sentiment. When conditions turn risk-off, crypto can move faster and farther than many portfolios are prepared for—especially those that treated bitcoin as a “new gold” rather than a high-volatility risk asset.

For traders, the near-term story is leverage, flows, and macro. For longer-term investors, the deeper question is whether the market can rebuild a stable demand base that isn’t dependent on continual inflows and momentum.