Summary of this article
Crypto market correction wipes $2 trillion; Bitcoin, Ethereum decline sharply in 2026.
Bitcoin near $65,000 after 30 per cent fall; Ethereum down 38 per cent this year.
Fed rate-cut uncertainty, leverage liquidations trigger crypto market volatility.
Analysts see continued volatility but key Bitcoin support around $58k–60k.
The broader cryptocurrency market wiped off half of its market captialisation from its peak in October 2025, with Bitcoin also trading slightly above $65,000, a notch above its lowest level of $60,000, in more than a year since US President Donald Trump took office for the second term. The sell-off was triggered by selling pressure and overall fear in risk assets.
Bitcoin Hits 16-Month Low
At the time of writing, Bitcoin was trading at $65,719.77, recovering slightly after hitting a 16-month low of $60,268.86. Meanwhile, Ethereum was trading at $1,917.20, its lowest level seen since April 2025. Bitcoin has fallen nearly 30 per cent so far in 2026, while Ethereum has declined 38 per cent during the same period. According to Reuters, the sharp fall in cryptocurrencies have erased around $2 trillion in market cap from their peak of $ 4.37 trillion in October 2025, and wiped off around $800 billion alone over the past month.
While investors are becoming risk averse, the broader reason for the fall is due to the uncertainty around rate cuts by the US Federal Reserve. This fear is further strengthened by concerns that artificial intelligence (AI) company valuations weigh on risk assets, which further led to the sharp fall in cryptocurrency.
5 February 2026
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What’s Driving Bitcoin’s Sharp Fall
Ashish Singhal, co-founder of CoinSwitch also attributed the fall to massive liquidations in the futures market, with over $700 million worth of positions liquidated in the last 24 hours.
According to Singhal, many traders were using high leverage, which triggered automatic liquidation at even a slight dip, thereby creating a chain reaction and seeing the sharp fall.
Meanwhile, others said that the fall was due to a broader squeeze in liquidity and not an asset-specific stress.
“The crypto market is currently witnessing a broad-based correction, with prices across major assets testing key support levels. Bitcoin briefly touched the $60,000-mark, while Ethereum hovered near $1,740, reflecting heightened caution among market participants. Altcoins have largely mirrored this trend, although selective strength is visible in pockets such as Hyperliquid, MYX Finance, and Decred, indicating that investors are still actively seeking relative value opportunities,” said Paras Malhotra, senior vice president – trade, custody & BizOps, CoinDCX.
“This phase appears closer to capitulation, where fear and uncertainty tend to dominate short-term sentiment. Historically, such phases often follow extended optimism and are marked by sharp pullbacks even on modest triggers. Recent geopolitical and macro developments have contributed to increased volatility, particularly in Bitcoin, prompting some institutional investors to reassess near-term exposure,” Malhotra added.
Market analysts see short-term movements to remain volatile, but could reinforce the importance of a disciplined risk management among long-term participants.
“A support around the $58,000–60,000 band remains technically significant as of now,” said Avinash Shekhar, co-founder & CEO, Pi42.
