Bitcoin Plunges Below $76,000: Is This the Capitulation or Just Another Trap for Bulls?

There are days when the crypto market feels like a casino, and then there are days like today, when the casino burns to the ground and the pit boss is selling marshmallows outside. As of February 1, 2026, Bitcoin has crashed through the psychological $80,000 floor, then sliced straight down to just above $75,000, marking its lowest point since April. The move wiped out $200 billion in crypto market cap faster than you can say 'liquidation cascade.'

If you blinked, you missed it. The selloff was brutal, relentless, and, for those still clinging to leverage, existential. According to TheCurrencyAnalytics, the world's largest digital asset is now down more than 10% to start February, trading at roughly $78,700, and more than $45,000 below the cycle high. The pain is not limited to Bitcoin. Shiba Inu, that perennial meme darling, hit a three-year low as open interest collapsed 11%. Step Finance, a Solana analytics platform, just lost $27 million to a treasury breach, adding insult to injury for anyone who thought DeFi hacks were a 2021 problem.

The carnage is not entirely without precedent. Bitcoin has a history of violent Januarys, and, as U.Today points out, these have sometimes led to bullish reversals in February. But tell that to traders who just got margin-called into oblivion. Michael Saylor, ever the orange-pilled optimist, tweeted 'more orange' as if that would stop the bleeding. Meanwhile, BitMine is sitting on a $6 billion unrealized loss from its 4.24 million ETH stash, bravely calling it 'strategic accumulation.'

So, what the hell happened? The proximate cause appears to be a confluence of macro jitters, liquidity drains, and a sudden evaporation of risk appetite. Treasury settlements and a rising Treasury General Account have sucked $64.3 billion out of market liquidity, according to Seeking Alpha. Stocks are wobbly, with even the S&P 500 showing signs of fatigue. When risk-off hits, crypto is still the first to get thrown out the window. Add in a few high-profile hacks and the usual suspects in meme coin land imploding, and you have a recipe for capitulation.

But here's the real story: This is not just about Bitcoin. The entire crypto complex is being repriced for a world where easy money is gone, regulatory uncertainty is the new normal, and the 'number go up' crowd is finally meeting gravity. The days of blind leverage and YOLO trades are being replaced by something resembling actual risk management. The question is whether this is the final flush before a new leg higher, or the start of a much deeper bear market.

Historically, Bitcoin has rewarded those with iron stomachs and punished the greedy. The January flush is almost a rite of passage at this point. In 2022 and 2024, similar drawdowns set the stage for monster rallies later in the year. But this time, there are new variables: institutional flows are less frothy, ETF demand is cooling, and the macro backdrop is far less forgiving. The Fed is not your friend. Liquidity is not your friend. Even the meme coins are not your friend.

Cross-asset correlations are also shifting. Bitcoin's correlation with tech stocks has weakened, while its relationship with liquidity metrics is stronger than ever. When the Treasury drains liquidity, Bitcoin feels it first. The S&P 500 is still near highs, but the cracks are showing. If equities roll over, crypto could be in for more pain. On the other hand, if this is just another liquidity flush, the bounce could be violent.

The technicals are ugly but not hopeless. $80,000 was critical support, and the breach triggered a cascade of stops. The next real support is in the $72,000-$74,000 zone, which coincides with the 200-day moving average. Resistance is now stacked at $80,000, then $85,000. RSI is deeply oversold, but that's been the case for days. The leverage flush is real—open interest has cratered, and funding rates are resetting. If the market can stabilize here, the setup for a sharp rebound is in place. But if $75,000 fails, the next leg down could be swift.

Strykr Watch

All eyes are on the $75,000 level. If Bitcoin can hold above this, the case for a short-term bottom strengthens. Below that, $72,000 is the last line of defense before things get really ugly. On the upside, $80,000 is now resistance, and a daily close above that would signal the worst is over. Keep an eye on open interest and funding rates—if they reset to neutral, the conditions for a squeeze are ripe. Volume profiles show heavy accumulation in the $74,000-$76,000 band, so expect fireworks if that area gets tested again.

But don't ignore the broader context. The crypto market is in risk-off mode, and any bounce will need confirmation from equities and liquidity flows. Watch for signs of stabilization in tech stocks and the Treasury market. If those markets calm down, crypto could catch a bid. If not, the path of least resistance is lower.

The risk here is that this is not just a liquidation event, but the start of a deeper structural unwind. If macro conditions worsen, or if another major hack hits, the selling could accelerate. On the other hand, if this is the final flush, the rally could be explosive. The key is to stay nimble and respect the levels.

The opportunity is obvious: If you're flat or light, this is the time to start scaling in with tight stops. If you're underwater, don't add to losers. Wait for confirmation—a daily close back above $80,000, or a clear sign that open interest has reset. For the brave, selling volatility here is tempting, but be prepared for more wild swings. The risk-reward is finally starting to look attractive, but only for those with discipline.

Strykr Take

This is not the end of crypto, but it is the end of easy money. The market is finally forcing out the weak hands and rewarding those who can manage risk. If Bitcoin holds $75,000, the setup for a violent rebound is in place. If not, there's more pain ahead. Either way, the next move will be fast and unforgiving. Stay sharp.

(datePublished: 2026-02-01 17:15 UTC)