#我在Gate广场过新年 Bitcoin's sharp decline has spared no one, even industry giants, with a loss of $700 million in a week.

Bitcoin has been rising for so long that people forget it can also fall. Many outsiders have suddenly realized that Bitcoin is now only around $70,000, and other cryptocurrencies have also dropped significantly. Not long ago, Bitcoin's price even touched a 16-month low of $60,062. Compared to the all-time high of $126,000 set in October 2025, this is nearly a 50% drop, and it has fallen nearly 20% since the beginning of this year.

What happened?
Analysts can always find reasons—
First, the macro environment shift has created primary pressure. The decision to nominate Kevin Woorh as the next Federal Reserve Chair by Trump brought policy uncertainty, with market expectations that interest rates will stay high for longer, strengthening the dollar. Coupled with a sharp decline in precious metals markets and consecutive drops in large tech stocks, investors tend to sell riskier assets like Bitcoin and hold cash for peace of mind.
Second, a reversal in capital flows has been a key driver of the decline. Last year, one of the main drivers of Bitcoin's rise was the popularity of Bitcoin ETFs, but recent fund inflows have significantly weakened. Bloomberg data shows that over the past three months, U.S.-listed cryptocurrency ETFs have experienced nearly $4 billion in net outflows. ETF capital flows are a crucial market indicator, and Citigroup research quantifies their impact: every $1 billion outflow from Bitcoin ETFs correlates with approximately a 3.4% drop in Bitcoin price. Meanwhile, retail participation is also declining. According to Bloomberg, the average purchase cost for Bitcoin ETF investors is about $84,100, but the current price is below $70,000, meaning everyone is losing money. Naturally, they have no mood or funds to "add positions." As a result, continuous outflows not only reflect market sentiment but also create selling pressure, suppressing price rebounds and forming a vicious cycle of "price drops—funds outflow—further price decline."
Third, high leverage has become a significant amplifier of the decline. Investors use leveraged financing to buy Bitcoin, and when prices suddenly plunge, platforms will forcibly sell investors' holdings to avoid losses, causing many to be liquidated and their accounts wiped out. CoinGlass data shows that from February 5 to 6, over 570,000 investors worldwide faced margin calls, with a single-day liquidation amount reaching $2.596 billion on February 6, with over 80% of that from leveraged long positions. Such large-scale liquidations in succession clearly increase market volatility.
However, some say these analyses are post hoc and cannot predict future trends. Even industry giants in the crypto space cannot fully escape the fallout from this crash in Bitcoin and other virtual currencies. For example, MicroStrategy (later renamed Strategy Inc.), a leading industry company, reported a quarterly loss of $12.4 billion. Crypto mogul Yili Hua lost $700 million in just one week. Renowned investor Cathie Wood, founder and CEO of ARK Invest, previously made a misjudgment; in late January, she stated in an interview that the market had "basically completed its downtrend."

The panic during this "continuous crash" is essentially an inevitable result of the unrestrained growth of the virtual currency sector.
Compared to the price plunge, the collapse of confidence is even more concerning. Previously, Bitcoin was called "digital gold," but this claim has been questioned after this major drop. Since January 2025, Bitcoin and gold have shown significant divergence: spot gold has gained nearly 90%, while Bitcoin has fallen about 30%. Facing global uncertainties, investors have not chosen Bitcoin but have flocked to traditional safe-haven assets like gold. When risks emerge, institutions prefer to sell Bitcoin first for cash rather than buy gold. Rather than being "digital gold," Wall Street institutions seem more inclined to view Bitcoin as a "highly elastic risk asset" integrated into regular portfolios. Data shows that in the second half of 2025, Bitcoin's correlation with U.S. tech stocks reached 0.8, meaning Bitcoin is increasingly resembling a leveraged tech stock.
There are clear disagreements about Bitcoin's future direction. According to prediction platform Polymarket, the market believes there is an 82% chance that Bitcoin will fall below $65,000 this year, and about a 60% chance it will drop below $55,000. However, some argue that Bitcoin has entered an oversold zone and may experience a technical rebound in the short term.
To determine whether the market has truly stabilized, attention should be paid to the capital flows of spot ETFs and the Cb premium index. But there are reports that some funds have already started to buy the dip.