Bitcoin plunges 50% in historic crash, sparking over $1 billion in liquidations
By isabelle // 2026-02-06
Copy
 
  • Bitcoin crashed toward $60,000 in a historic single-day plunge.
  • Over $1 billion in leveraged long positions were forcibly liquidated.
  • Crypto-linked stocks like Coinbase and mining firms saw double-digit declines.
  • BlackRock's Bitcoin ETF saw record trading volume amid the 13% price drop.
  • Analysts cite institutional ETF outflows and a broader flight from risk assets.
The digital gold rush has hit a historic avalanche. Bitcoin, the flagship cryptocurrency, experienced one of its most severe single-day crashes on Thursday, plunging toward the $60,000 mark and wiping out roughly half of its value from its all-time high just four months ago. This staggering collapse, which saw over $1 billion in leveraged bets forcibly liquidated, has sent shockwaves through crypto-linked stocks and ignited fears of a prolonged bear market reminiscent of the industry’s darkest days. According to data from Bitcoin Magazine Pro, the cryptocurrency's price slid sharply through critical support levels, falling as low as around $60,000. This represents the largest raw dollar drawdown ever recorded for Bitcoin. The October 2025 peak above $126,000 now sits a daunting $63,000 above current prices, placing this correction among Bitcoin’s most extreme historical crashes, even surpassing the severe selling that followed the collapse of the FTX exchange.

A cascade of liquidations

The velocity of the drop was supercharged by the derivatives market. As the price collapsed, it triggered a cascade of automatic sell-offs for traders who had used borrowed money to bet on higher prices. Data from Coinglass shows over $1.1 billion in long positions were liquidated in a 24-hour period, creating a feedback loop of selling that pushed prices relentlessly lower after key support near $70,000 failed to hold. The carnage was not confined to the crypto markets. Equity shares of companies tied to digital assets were hammered. Major mining firms like Riot Platforms and MARA Holdings saw double-digit percentage declines. Publicly traded crypto exchanges Coinbase and Robinhood also fell sharply, down around 13% and 10% respectively on Thursday, as the broader tech sector faced significant selling pressure.

Record volume amid the plunge

In a striking paradox, the iShares Bitcoin Trust (IBIT), the spot Bitcoin ETF managed by financial giant BlackRock, shattered its daily trading volume record with approximately $10 billion worth of shares changing hands. This frenzy of activity occurred even as the fund’s price plummeted 13%, marking its second-worst daily performance since launch. The volume indicates a massive transfer of ownership, but the direction was decisively toward the exits. Analysts point to a confluence of factors driving the selloff. Deutsche Bank analysts Marion Laboure and Camilla Siazon attributed the slide to “massive withdrawals from institutional ETFs.” This institutional exodus follows months of cooling sentiment; U.S. spot bitcoin ETFs witnessed outflows of more than $3 billion in January alone, after significant outflows in the preceding months. The downturn also aligns with a broader flight from risk assets. Geopolitical tensions and a sharp sell-off in technology stocks have prompted investors to seek safer harbors, with traditional havens like gold and silver seeing volatile but substantial inflows. “Bitcoin’s been going down since October (2025), maybe you could ask if it was the canary in the coalmine, or a coincidence,” said Chris Weston, head of research at brokerage Pepperstone. This crash returns Bitcoin to a familiar, brutal pattern of volatility. The cryptocurrency famously soared to a then-high near $69,000 in November 2021 before cratering by roughly 78% to below $16,000 over the following year. The current downturn challenges the narrative of newfound stability following the introduction of U.S. spot ETFs and pro-crypto political signals. Some market observers warn the bottom may not yet be in. “I think we are going to have a little counter-trend rally that might go sideways or bounce a little bit,” Markus Thielen, head of research at 10X Research, told CNBC. “But I think during the summer we make another low.” His firm estimates bitcoin could potentially fall as low as $50,000. The event serves as a harsh reminder of the asset’s inherent volatility. As Joshua Chu of the Hong Kong Web3 Association noted, the plunge demonstrates what happens when “leverage and narrative ran ahead of reality.” For all the talk of Bitcoin as digital gold or a revolutionary store of value, Thursday’s historic wipeout proves that in the short term, it remains an asset beholden to market sentiment, leverage, and the age-old forces of fear and greed. The bill for unbridled optimism, it seems, has now come due. Sources for this article include: BitcoinMagazine.com Forbes.com Reuters.com CNBC.com
Copy