Finance
Bitcoin plummets, driving $2 trillion tumble in crypto market value
Published by Global Banking & Finance Review®
Posted on February 5, 2026
5 min readLast updated: February 5, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on February 5, 2026
5 min readLast updated: February 5, 2026
Bitcoin nears a critical $70,000 level amid market decline, influenced by Federal Reserve changes and institutional investor withdrawals.
By Gertrude Chavez-Dreyfuss, Rae Wee and Amanda Cooper
NEW YORK/SINGAPORE/LONDON, Feb 5 (Reuters) - Bitcoin plunged on Thursday, its decline accelerating amid weakening risk sentiment driven in part by volatility in precious metals and a broad selloff in tech shares.
The world's largest cryptocurrency fell to a low of $63,295.74, its weakest level since October 2024, a month before Republican Donald Trump won the U.S. presidential election, having signaled his intention to support crypto on the campaign trail. It was last down 12.6% at $63,525, on track for its largest one-day fall since November 2022.
Roughly $1 billion in bitcoin positions have been liquidated in the past 24 hours, according to data from CoinGlass.
All told, the global crypto market has lost $2 trillion in value since hitting a peak of $4.379 trillion in early October, CoinGecko data showed, with some $800 billion wiped out in the last month alone.
Bitcoin has already fallen 17% for the week, taking its losses for the year so far to 28%. Ether, the second-largest cryptocurrency in terms of market capitalization, was down more than 13% at $1,854 late on Thursday. Ether has fallen 19% this week, with losses of nearly 38% so far this year.
Sentiment on crypto was affected by the latest selling in metals and stocks. Gold and silver, for instance, have become more volatile as a result of leveraged buying and speculative flows. Silver, for one, fell as much as 18% to a low of $72.21.
In equities, the S&P 500 sank to a seven-week low, while the Nasdaq slid to its lowest in more than two months on Thursday, as the AI theme came under renewed pressure.
"It's clear the crypto market is now in full capitulation mode," said Nic Puckrin, investment analyst and co-founder of Coin Bureau. "If previous cycles are anything to go by, this is no longer a short-term correction, but rather a transition from distribution to reset - and these typically take months, not weeks."
The latest crypto tumble has knocked down shares of companies holding bitcoin and other digital assets, stoking worries that the market turmoil is spreading beyond token prices.
MARKETS 'FEAR A HAWK' WITH WARSH
Trump's selection of Kevin Warsh as his pick to become the next Federal Reserve chair has also fueled the latest rout in cryptocurrencies, some analysts said, due to expectations he could shrink the Fed's balance sheet.
Cryptocurrencies have widely been regarded as beneficiaries of a large balance sheet, having tended to rally while the Fed greased money markets with liquidity - a support for speculative assets.
"The market fears a hawk with him," said Manuel Villegas Franceschi from the next generation research team at Julius Baer. "A smaller balance sheet is not going to provide any tailwinds for crypto."
To be sure, cryptocurrencies have struggled for months since a record crash last October sent bitcoin tumbling from a peak as leveraged positions got washed out. That has left investors less keen on digital assets and sentiment toward the industry fragile.
"We believe this broader decline is mainly driven by massive withdrawals from institutional ETFs (exchange traded funds). These funds have seen billions of dollars flow out each month since the October 2025 downturn," Deutsche Bank analysts said in a note to clients.
They added that U.S. spot bitcoin ETFs witnessed outflows of more than $3 billion in January, following outflows of about $2 billion and $7 billion in December and November respectively.
"This steady selling in our view signals that traditional investors are losing interest, and overall pessimism about crypto is growing," the analysts said.
BROADER ISSUES IN TECH SECTOR
Bitcoin's fortunes have been tied to the broader tech sector for some time. The price tended to rise, particularly on the back of investor enthusiasm over artificial intelligence.
This week's rout in global software stocks has accelerated the slide in the value of bitcoin, ether and other tokens.
Market watchers are starting to question if this decline marks the start of a steeper correction.
"Concerns are being raised around the crypto miners and whether we could be looking at forced liquidations if prices continue to fall, which could lead to a vicious cycle," Jefferies strategist Mohit Kumar said in a note.
"Our view on crypto has always been that it should be never more than a very small portion of the overall portfolio. However, it is also an asset class that is heavily owned, particularly by retail investors, and hence adds to the overall market risk," Kumar said.
(Reporting by Gertrude Chavez-Dreyfuss in New York, Rae Wee in Singapore and Amanda Cooper in London; Additional reporting by Lucy Raitano in London; Editing by Edwina Gibbs, Will Dunham, Jan Harvey and Alistair Bell)
Bitcoin is a decentralized digital currency that allows people to send or receive money over the internet without the need for a central authority or bank.
Ether is the native cryptocurrency of the Ethereum platform, which enables developers to build and deploy decentralized applications using smart contracts.
A cryptocurrency is a digital or virtual currency that uses cryptography for security and operates on a technology called blockchain.
The Federal Reserve, often referred to as the Fed, is the central bank of the United States, responsible for regulating the country's monetary policy.
Market sentiment refers to the overall attitude of investors toward a particular security or financial market, often influenced by news, events, and economic indicators.
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