Bitcoin is currently experiencing a sharp decline, dropping below the $80,000 mark for the first time since April 2025. As of today, February 1, 2026, the price is hovering around $78,500, reflecting a crash of over 6% in the last 24 hours
The "bad" fall we are seeing can be the result of several major factors hitting the market at once:
1. The "Warsh Shock" (U.S. Federal Reserve):
The biggest immediate trigger was U.S. President Trump nominating Kevin Warsh to replace Jerome Powell as the Federal Reserve Chair. Warsh is known for being "hawkish"—meaning he favors tightening the money supply and shrinking the Fed's balance sheet. This has terrified investors who relied on "cheap money" (liquidity) to fuel crypto prices.
2. Massive Liquidations:
Because many traders were betting on Bitcoin going higher, the sudden price dip triggered a "liquidation cascade." Over $1.7 billion in leveraged positions were wiped out in just 24 hours. When these "long" bets are forced to close, it creates a domino effect that pushes the price down even faster.
3. Geopolitical Tensions & "Risk-Off" Sentiment:
Middle East Tensions: An explosion at Iran’s Bandar Abbas port (a major oil shipping hub) has increased fears of a conflict involving the U.S. and Iran.
U.S. Government Shutdown:
Uncertainty surrounding a short U.S. government shutdown has made investors nervous.
In times of high stress, investors often sell "risky" assets like Bitcoin and move their money into safer options, though interestingly, gold and silver also saw a massive crash this week due to extreme volatility.
4. Weak Institutional Demand:
Interest in $BTC ETFs has cooled significantly. Last week saw over $1.1 billion in outflows from these funds. Without institutions buying the dip, there wasn't enough support to keep the price above the $85,000 and $80,000 support levels.
5. Low Weekend Liquidity:
Since it is Sunday, trading volumes are lower than during the week. In crypto, low volume often leads to much more "violent" price swings because there aren't enough active buyers to stabilize the market.
Is there a bottom in sight?
Analysts are watching the $75,000 level closely. If #Bitcoin fails to hold current levels, that could be the next stop. However, some see this as a "painful reset" that clears out excessive gambling (leverage) from the market.
