Bitcoin has plummeted to its lowest levels since April 2025, weighed down by a combination of factors including significant outflows from U.S. spot Bitcoin ETFs and thin weekend liquidity. The largest cryptocurrency by market capitalization fell below $75,000 on February 2, 2026, marking a notable decline from its all-time high of over $126,300 reached last year.
Several analysts attribute the sell-off to a mix of macroeconomic uncertainty, weakening global risk sentiment, and substantial institutional outflows from U.S. spot Bitcoin ETFs. According to CoinDesk Data, ETF outflows hit $1.3 billion over the past week, representing the steepest outflow since February 2025, as institutional investors reduced their exposure to digital assets. Four consecutive days of net outflows from Bitcoin ETFs mark a significant shift from the initial period after the SEC's approval of these ETFs in early 2024, which saw record-breaking inflows. These outflows can create selling pressure, as Authorized Participants may need to sell Bitcoin from the fund's holdings to meet redemption requests. This increased supply, if not met with sufficient demand, can contribute to a price decline.
Adding to the downward pressure, the market has been experiencing thin liquidity, which exacerbates price swings. A lack of interest from retail investors has contributed to low trading volumes, which analysts suggest may persist for another one or two quarters.
Geopolitical tensions have also played a role in the recent market downturn. Reports of an explosion at Iran's Bandar Abbas port and fears of a potential escalation between the U.S. and Iran have prompted a flight to safety, weighing on risk assets, including cryptocurrencies.
Concerns over U.S. monetary policy have further strained market sentiment. President Donald Trump's nomination of Kevin Warsh as the next Federal Reserve chair has been perceived as a hawkish move, boosting the U.S. dollar and intensifying selling pressure in crypto markets. Stronger U.S. economic data has also pushed expectations for Federal Reserve rate cuts further out, adding to the pressure.
The recent price drop has led to a mechanical unwinding of leveraged positions, further accelerating the decline. The absence of aggressive dip-buying from large institutions during the sell-off has also left prices exposed, as market participants reassess near-term risk.
The total value of the crypto market has decreased significantly over the past few days. Liquidations of short and long positions have also occurred, primarily around Bitcoin and Ethereum. This situation raises concerns about Bitcoin's role in broader investment portfolios, particularly its ability to act as a hedge against currency depreciation.