Bitcoin’s Death Spiral: Bulls Liquidated as Price Plunges Below $67K and On-Chain Metrics Crack

If you thought Bitcoin was immune to gravity, today’s price action is a brutal reminder that even the king of crypto can get margin called into oblivion. $BTC has cratered below $67,000, erasing every gain since Trump’s 2024 election win and dragging the rest of the crypto complex into a liquidity black hole. In just four hours, over $118.63 million in long positions were vaporized, according to CoinGlass. The word ‘capitulation’ doesn’t quite do justice to the carnage, this is the kind of move that makes even perma-bulls question their life choices.

The news cycle is a parade of pain. XRP is down 16% in 24 hours, Dogecoin has “added a zero” after an 18% weekly drawdown, and Bitcoin itself is being compared to its 2021 lows. CryptoQuant notes that Bitcoin has broken below its 365-day moving average for the first time since March 2022, a technical death knell that has historically preceded deeper drawdowns. The Block reports that even as underlying business activity in crypto improves, the market is in full “sell everything” mode.

The timeline reads like a horror story for bulls. The selloff began in Asia hours, with Bitcoin slicing through $70,000 like a hot knife through butter. Liquidations accelerated as European traders woke up to a sea of red, and by the time New York opened, the four-hour death spiral was in full swing. On-chain metrics are flashing distress: exchange inflows are spiking, whale wallets are dumping, and funding rates have flipped negative across major derivatives venues.

Context matters. This is not just a crypto story, it’s a macro story. The risk-off move is happening as U.S. equities flatline, tech stocks bleed, and the labor market cracks. The old narrative that Bitcoin is an “uncorrelated asset” is looking increasingly quaint. Correlations with the Nasdaq have surged to multi-year highs, and the market is treating Bitcoin like the world’s most volatile tech stock.

The last time Bitcoin broke below its 365-day moving average, it triggered a cascade that didn’t stop until the 2022 bear market bottomed out. The difference this time? There’s no Fed pivot on the horizon, no easy liquidity, and no ETF inflows to save the day. If anything, ETF outflows have accelerated, with institutional conviction looking as shaky as retail sentiment.

The bulls will point to Michael Burry’s cryptic “$BTC Patterns” tweet as a sign that smart money is watching for a reversal. The bears will counter that patterns don’t matter when the order book is a wasteland and every rally is met with fresh supply. The real story is that Bitcoin is in the middle of a classic liquidation cascade, and the only thing that will stop it is a flush big enough to scare even the most stubborn hodlers into capitulation.

Strykr Watch

Technically, Bitcoin is hanging by a thread. The $67,000 level is critical, lose it, and the next major support is $63,000, with some analysts eyeing $60,000 as the ultimate line in the sand. The 365-day moving average, now broken, flips from support to resistance. RSI is below 30, deep in oversold territory, but don’t expect a bounce until the liquidation engine runs out of fuel. Watch funding rates and open interest: if they reset, it’s a sign the worst is over. Until then, every rally is suspect.

The risk is that this turns into a full-blown capitulation event, with altcoins leading the way down. If $BTC loses $63,000, there’s little to stop a test of $60,000 or even the 2021 lows. On the upside, a reclaim of $70,000 would signal that the worst is over, but that’s a tall order given the current sentiment.

For traders, the opportunity is in the extremes. If you’re nimble, there’s a setup for a mean reversion bounce off $63,000, with a tight stop below $60,000. For the brave, shorting failed rallies into resistance at $70,000 offers defined risk. Just don’t get greedy, this is a market that punishes hubris.

Strykr Take

Bitcoin’s death spiral is a reminder that leverage cuts both ways. The liquidation cascade isn’t over until the last bull gives up. Our take: wait for the flush, then buy when everyone else is too scared to look. Until then, respect the tape and don’t try to catch falling knives.

datePublished: 2026-02-05 16:01 UTC