Business Sandesh Indian Newspaper | Articles | Opinion Pieces | Research Studies | Findings & News | Sandesh News
The cryptocurrency market suffered a sharp correction in early February 2026, with total market capitalization dropping by approximately $250 billion over the weekend and recent days, driven primarily by a U.S. dollar liquidity squeeze rather than inherent flaws in digital assets.
Analysts, including macro investor Raoul Pal, attributed the plunge to tightening dollar liquidity and reduced risk appetite spilling over from traditional markets. This macro-driven event impacted speculative assets like cryptocurrencies, equities, and even precious metals, amid elevated bond yields, expectations of sustained higher interest rates, and concerns over Federal Reserve policy under potential new leadership (e.g., Kevin Warsh’s nomination). Thin weekend trading amplified volatility, leading to cascading liquidations exceeding $1.7 billion in some reports, with total figures reaching billions across positions.
Bitcoin (BTC) fell sharply, dipping below $75,000 to as low as around $74,500–$74,800 before partially recovering to trade near $76,000–$77,000 on February 2, 2026 (per sources like Yahoo Finance, CoinMetrics, and CoinDesk). This marked a roughly 3–12% decline in recent sessions, revisiting levels not seen since mid-2025.
Ethereum (ETH) underperformed, sliding to near $2,200–$2,300 amid heavier unwinds of leveraged positions. Broader altcoins faced 5–10%+ losses, contributing to the market-wide erasure of value.
Experts rejected notions of a “broken” crypto market, emphasizing that the downturn mirrored pressures on risk assets globally rather than blockchain or sector-specific failures. On-chain metrics and institutional adoption trends remain supportive long-term, with some viewing the pullback as a healthy reset after prior rallies.
Volatility is likely to persist as traders monitor U.S. economic indicators, Fed signals, and liquidity flows. While short-term downside risks remain if supports fail, fundamentals suggest potential for stabilization once macro conditions ease.
