In brief
- Bitcoin accounted for more than 40% of roughly $650 million in crypto liquidations over the past 24 hours, highlighting stress across derivatives markets.
- Some analysts say long-term holders are trimming positions as Bitcoin underperforms traditional inflation hedges such as gold.
- Market participants see scope for further downside, with several pointing to a potential test of the $60,000 level if the corrective phase continues.
Bitcoin extended losses Wednesday evening as selling pressure resumed and liquidation activity picked up across derivatives markets, reigniting investor concerns over continued stress.
While Bitcoin briefly fell beneath the $72,000 mark for the first time since November 2024, the drawdown is a “common” trait for the digital asset, John Haar, managing director at Bitcoin financial services firm Swan Bitcoin, told Decrypt.
“It was less than four months ago that Bitcoin hit a new all-time high of $125,000,” Haar said. “Nothing has changed the long-term Bitcoin investment thesis.”
Bitcoin is trading around $71,400, down 6% on the day and nearly 43% from its October 6 all-time high of $126,080, according to CoinGecko data.
Haar attributes the broader sell-off to macroeconomic factors, including President Trump’s nomination of Kevin Warsh to the Chair of the Federal Reserve, the impact of leveraged traders being flushed out, and geopolitical tensions.
Total crypto liquidations over the last 24-hours have jumped to above $654 million, with Bitcoin accounting for 41% of that figure at $272 million, CoinGlass data shows.
The selling pressure appears to be “driven largely by long-term holders reducing exposure,” Georgii Verbitskii, founder of crypto investment app TYMIO, told Decrypt.
“One of Bitcoin’s core narratives—that it reliably protects against fiat inflation—is being questioned in the short term,” Verbitskii said. “While gold and other metals continue to rise, Bitcoin has moved in the opposite direction, and that divergence matters.”
This has led long-term Bitcoin holders to reassess their positions, he said. “This doesn’t mean the long-term thesis is broken, but it does suggest that confidence in the inflation-hedge narrative has weakened for now.”
Still, the downtrend “leaves room for further downside,” he noted.
“If this corrective wave continues, a move toward the $60,000 area can’t be ruled out. That scenario would make this year resemble past reset phases like 2018 or 2022 rather than a continuation of a strong uptrend,” he said.
Macro patience
Analysts say the broader market reaction remains under pressure as leverage unwinds and ETF flows remain uneven, with expectations that consolidation and some patience would be needed before downside risks ease and conditions stabilize.
“The current situation is clearly unfavorable. Bitcoin is reacting negatively to both macro tailwinds and headwinds, appearing increasingly sidelined,” Ryan Yoon, senior analyst at Tiger Research, told Decrypt.
However, Bitcoin has “entered oversold territory,” Yoon added. “Its value as an alternative asset will shine once liquidity explicitly flows back into the market. February is expected to be a challenging month.
Going below $72,000, even if briefly, “doesn’t break the more bullish thesis, but it extends the unwind and pushes the market into a patience required phase rather than immediate continuation higher,” Vincent Liu, chief investment officer at Kronos Research, told Decrypt.
The sell-off could “fade,” Liu said, as leverage “compresses without further downside, ETF outflows slow, and spot demand absorbs supply.”
Signs of such a shift would include leverage stabilizing and prices holding during sell-offs or negative news, Liu noted.
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