As of February 1, 2026, the cryptocurrency market is experiencing a sharp downturn, with total market capitalization dropping by around 5-7% in the last 24 hours, wiping out over $200 billion in value.
Major coins like $BTC Bitcoin (BTC) have fallen below $78,000-$79,000 (down 6-7% from recent levels), $ETH Ethereum (ETH) to around $2,400 (down 9-11%), $SOL Solana (SOL) to about $105 (down 10%), and smaller assets like Pi Network's PI following suit with more modest but consistent declines.
This extends a multi-day correction that began earlier in the week, with BTC hitting its lowest point since November 2025.
The Fear & Greed Index is at extreme lows (around 14-18), signaling widespread panic.
This isn't isolated to crypto—it's part of a broader "risk-off" move across global markets, where investors are fleeing volatile assets like stocks (especially tech) and cryptocurrencies toward safer havens such as gold, bonds, and the strengthening U.S. dollar.
Weekend trading has amplified the volatility due to thinner liquidity, making price swings more exaggerated.
Why Is This Happening?
The decline stems from a convergence of macroeconomic, geopolitical, and crypto-specific factors:
1. Geopolitical Tensions and Trade Wars: Escalating conflicts in the Middle East, including an explosion at Iran's Bandar Abbas port (a key shipping hub), have heightened global uncertainty.
Additionally, U.S. President Trump's recent threats to impose 10% tariffs (rising to 25%) on goods from eight European countries (Denmark, Norway, Sweden, France, Germany, UK, Netherlands, Finland) over the Greenland dispute have sparked fears of renewed trade wars and retaliatory measures.
This has driven a sell-off in risk assets, including crypto.
2. U.S. Political and Economic Uncertainty: A partial U.S. government shutdown began on January 31 after Congress failed to pass funding bills, paralyzing federal operations until at least February 2.
Higher-than-expected inflation data has fueled concerns about interest rate hikes.
The nomination of Kevin Warsh (a former Fed Governor seen as "hawkish") as the next Federal Reserve Chair in May has strengthened the dollar and raised expectations of tighter monetary policy, reducing liquidity that has historically boosted crypto.
3. Crypto Market Dynamics: Heavy spot selling by long-term holders broke key support levels (e.g., BTC's $82,500-$84,600), triggering a cascade of liquidations—over $2.2 billion in 24 hours, the highest since October 2025.
U.S. spot BTC and ETH ETFs saw massive outflows of $1.82 billion last week, shifting capital to precious metals like gold.
Bearish options trading reflects growing fear of further drops to $75,000-$76,000.
These factors have created a perfect storm, with technical breakdowns (e.g., bearish wedge patterns) accelerating the sell-off.
Who Is "Behind" This?
There's no single entity or conspiracy orchestrating the drop—it's a market reaction to interconnected events. Key players and influences include:
- Governments and Policymakers: Trump's administration for tariff threats, Congress for the shutdown, and the Fed nomination process (Warsh's hawkish stance).
Geopolitical actors like Iran and European nations indirectly contribute via tensions.
- Institutions and Whales: Long-term holders and institutions (e.g., via ETFs) are selling, with data showing heavy spot outflows.
No evidence of a coordinated "dump" by a specific group, but large players amplify moves.
- Market Forces: Retail and leveraged traders (over 335,000 liquidated) are caught in the unwind, but they're reacting, not causing.
Crypto markets are decentralized, so "behind" often means systemic risks rather than villains. Some X discussions point to bearish sentiment from ETF flows and Fed fears, but no unified "who."
Why Is Crypto Marketing So Dangerous, Leading to "Liquidating Everyone"?
Crypto marketing often promotes high-reward narratives (e.g., "moonshots," 100x gains, FOMO-driven hype) that encourage overleveraged trading on platforms like futures exchanges.
This is dangerous because:
-Hype vs. Reality: Influencers, projects (like Pi Network, criticized for pyramid-like marketing), and ads tout "easy money" without emphasizing risks, drawing in inexperienced traders who use 10x-100x leverage.
When prices drop (as now), leveraged positions get liquidated en masse, forcing sales that deepen the crash—a vicious cycle.
Mass Liquidations: In this event, $2.2B in longs were wiped out, mostly bullish bets on BTC/ETH/SOL.
Marketing frames trading as "gambling with upside," but ignores how thin liquidity and volatility can liquidate "everyone" in hours.
Broader Risks: It fosters pump-and-dump schemes, where early promoters exit at highs, leaving retail holders bag-holding. Regulators warn this creates bubbles, as seen in past cycles.
For Pi specifically, its marketing (free mining app) has been called misleading, promising value without full mainnet utility, leading to false expectations.
In short, aggressive marketing amplifies greed, leading to overexposure and chain-reaction liquidations when sentiment flips. Always trade with caution—use spot over leverage, and DYOR.
Markets could stabilize if shutdown resolves or tensions ease, but watch for further drops to $75k for BTC. Check live sources for updates.
