Bitcoin Plunges Below $80,000, Triggering Over $1 Billion in Liquidations Amidst Macroeconomic Headwinds

In the early hours of February 1st, Bitcoin experienced a sharp decline, breaching the critical $80,000 threshold and hitting a low of $79,000 amidst intense volatility across the cryptocurrency market. This dramatic price movement triggered a cascade of liquidations, wiping out over $270 million in leveraged positions within a single hour. The breach of this pivotal support level has sent alarm bells ringing among traders and analysts, who widely regard $80,000 as a significant psychological barrier. According to Coinglass data, this massive crypto market event saw over $1 billion in long positions liquidated in the four hours leading up to early February 1st.

The brunt of this market shock was primarily borne by leveraged traders who had placed bets on price increases, leading to forced liquidations that further intensified the market’s downward spiral.

Macroeconomic Pressures Fueling a Broader Downturn

This latest market purge is not an isolated incident but rather a continuation of a series of brutal liquidation events observed between 2025 and 2026. Global macroeconomic pressures have repeatedly triggered cascading sell-offs, pushing risk-averse capital away from digital assets. Factors such as the looming threat of US tariffs on Canadian and Chinese imports, the uncertainty surrounding a potential government shutdown, and speculative interventions in the Japanese Yen market have collectively steered safe-haven funds towards traditional assets like gold and silver, while simultaneously suppressing risk assets such as cryptocurrencies.

Compounding this cautious sentiment are weak weekend trading volumes, escalating geopolitical tensions in the Middle East, ongoing uncertainty regarding a US government shutdown, and the Federal Reserve’s prudent policy stance. Coinglass data further underscores how a high open interest to liquidation ratio often foreshadows sustained market pressure, with long positions consistently dominating the losses in such scenarios.

Technical Breakdown and Future Outlook

Multiple technical support levels have been successively breached, prompting analysts to warn of potential further downside risk for Bitcoin. Market analysts are pointing to a clear technical breakdown, with the crucial support zone between $80,000 and $82,000 now compromised. Should buying interest fail to materialize, a further decline towards the $74,000 to $78,000 range appears increasingly likely. Other analyses suggest that if Bitcoin cannot reclaim and hold above $80,000, the next significant support level is the April 2025 low, approximately $75,000, a level previously established during tariff-related market turbulence earlier that year. Some bearish analysts are even projecting a potential drop to $70,000 or lower if selling pressure intensifies.

Catalysts: ETF Outflows and Institutional Selling

Adding to the bearish momentum were significant ETF outflows exceeding $1.1 billion in late January, coupled with a high-profile options expiry worth $880 million. Data suggests that large institutional holders, often referred to as “whales,” appear to be offloading their holdings. This trend mirrors historical cyclical patterns where low-liquidity weekends tend to exacerbate market volatility, leading to more pronounced price swings.

Divergent Views Amidst Uncertainty

Despite the prevailing market downturn, some traders view these current price levels as potential buying opportunities, drawing parallels to past corrections that often preceded significant rallies. However, with the fear index soaring and no immediate catalysts for recovery in sight, the market largely remains in a wait-and-see mode. The broader context reveals that Bitcoin has now retreated over 34% from its October 2025 peak of $126,000, highlighting the significant correction it has undergone.