Bitcoin Bulls Face Reckoning as ETF Investors Go Underwater and Liquidations Mount

If you wanted a clean, clinical correction in crypto, you’re out of luck. Instead, what we’ve got is a full-blown risk-off stampede, with Bitcoin’s price action looking like a live-fire drill for every leveraged long in the market. As of 2026-02-02, Bitcoin has crashed through the $75,000 floor, triggering a cascade of liquidations and leaving the average US spot Bitcoin ETF investor officially underwater. That’s not just a technical milestone, it’s a psychological one. The ETF crowd, who were promised a safe, regulated on-ramp to the digital gold rush, are now staring at red ink on their brokerage screens. The market’s message? Welcome to the big leagues. This is what volatility actually feels like.

The numbers are as ugly as the mood. In the last 24 hours, more than $704,000,000 in leveraged crypto bets have been liquidated, according to DailyHodl. Bitcoin’s price has plunged to $74,600, a level not seen since the last major correction, and the carnage is spreading. BlackRock’s IBIT ETF, once the darling of the institutional crowd, is now recording historic losses. Michael Saylor, the high priest of Bitcoin maximalism, is reportedly sitting on an unrealized loss of $900 million at his Bitcoin treasury shop, Strategy. Even Binance, still licking its wounds from the October liquidation fiasco, is making a very public show of buying Bitcoin for its insurance fund. If that doesn’t scream “crisis management,” nothing does.

The backdrop is a perfect storm of thin liquidity, macro jitters, and a sudden evaporation of risk appetite. Asian currencies are mixed as traders digest Kevin Warsh’s nomination as the next Fed Chair, and global equities are wobbling. The S&P 500 eked out a 1.4% gain in January, but momentum is fading fast. In crypto, the pain is acute. Tether dominance is rising, signaling that traders are parking capital in stablecoins and waiting for the dust to settle. The total crypto market cap is now on its fifth consecutive monthly decline. This isn’t just a correction, it’s a reality check.

So what’s driving the selloff? Start with the obvious: leverage. The crypto market has always been a playground for the over-leveraged and the under-cautious, but the recent run-up to $124,700 (yes, that happened) left a lot of latecomers holding the bag. When the unwind started, it was merciless. The ETF crowd, who thought they were buying the dip, are now the dip. The irony is almost poetic. Meanwhile, the macro backdrop is anything but supportive. Warsh’s nomination signals a potentially more hawkish Fed, and the global risk-off mood is sucking liquidity out of every asset class that isn’t nailed down. Metals are selling off, Asian equities are in retreat, and even the US consumer is starting to blink. The German retail sales print was a rounding error at +0.1%. Not exactly the stuff of bull markets.

But let’s not pretend this is just about macro. Crypto is still crypto, and when the algos smell blood, they go for the jugular. The liquidation cascade is both a symptom and a cause. Once Bitcoin broke below $75,000, the stops started triggering, and the feedback loop took over. The ETF crowd, who never signed up for this kind of volatility, are now learning the hard way that “regulated” doesn’t mean “safe.” The irony is that the very products designed to bring institutional credibility to crypto are now amplifying the pain. When the average ETF buyer is underwater, you know the market has changed.

The technicals are a mess. Bitcoin is flirting with the $74,600 level, with key support lurking at $60,000–$63,000. Elliott Wave analysts are already calling for a deeper pullback. Tether dominance is rising, a classic sign that traders are bailing out of risk and into the safety of stablecoins. The RSI is oversold, but that’s cold comfort when the liquidation engine is running hot. The market is in full risk-off mode, and the only question is how much lower it can go before the forced selling exhausts itself.

Strykr Watch

If you’re looking for technical levels that matter, $75,000 is the new Maginot Line. Below that, the next real support is in the $60,000–$63,000 zone. If Bitcoin can’t hold there, the next stop is a lot lower. Resistance is now at $78,000, with a major psychological barrier at $80,000. The RSI is deep in oversold territory, but that hasn’t stopped the bleeding. Watch Tether dominance—if it keeps rising, the bottom isn’t in. The liquidation engine is still running, and until that cools off, every bounce is suspect.

The risk factors are legion. If the Fed signals a more hawkish stance under Warsh, expect more pain. If ETF outflows accelerate, the selling could feed on itself. And if Tether dominance keeps climbing, it means the market is still in risk-off mode. The biggest risk is that the ETF crowd, who are not used to this kind of volatility, decide to cut their losses en masse. That could turn a correction into a rout. On the flip side, if Bitcoin can reclaim $78,000 and hold, the selling could exhaust itself and set the stage for a relief rally. But don’t bet on it until the liquidation engine cools down.

The opportunities are real, but they’re not for the faint of heart. If you’re a long-term believer, this is the kind of washout that creates value. But you have to be willing to stomach more pain. The smart trade is to wait for confirmation—a reclaim of $78,000, or a successful test of the $60,000–$63,000 support. If you’re nimble, there’s money to be made on the short side, but don’t overstay your welcome. The liquidation engine cuts both ways. For ETF investors, this is a gut check. If you believe in the long-term story, this is a buying opportunity. If not, it’s time to reassess.

Strykr Take

This isn’t just a correction, it’s a regime change. The ETF era promised safety, but delivered volatility. The average investor is now underwater, and the market is in full risk-off mode. The smart money is waiting for confirmation, not trying to catch falling knives. The bottom isn’t in until the liquidation engine stops. Strykr Pulse 38/100. Threat Level 4/5. This is a high-risk, high-reward environment. Trade accordingly.