22 Days to Evaporate $1 Trillion: The Speed and Structure of the Crypto Market Shrinkage

Bitcoin prices have fallen sharply from recent highs, according to Gate Market data, as of February 6, 2026, its price stands at $64,804.6, while Ethereum has dropped to $1,911.46.

Based on market data, since mid-January, the total market capitalization of the entire cryptocurrency market has shrunk by approximately $1 trillion. This rapid decline is not caused by a single factor but results from the combined effects of macro liquidity tightening and internal leverage structures within the market.

Visualizing the Market Crash: A Panorama of Speed and Scale

The crypto market has recently experienced a dramatic value evaporation. According to CoinGecko data, in less than a week since January 29, the total market cap has evaporated by $467.6 billion. Extending the timeline to the past three weeks, this figure becomes even more staggering—about $1 trillion wiped out, equivalent to the annual GDP of a medium-sized country.

The speed of the market decline is equally remarkable. Bitcoin, as the market leader, has fallen about 40% from its all-time high set last October. More specifically, Bitcoin’s price has dropped over 50% from its peak, falling back to around $61,000. This sharp decline is not limited to Bitcoin. Other cryptocurrencies, excluding BTC, have fallen 51% from their October highs. Considering token inflation that artificially inflated market cap, the actual price decline could be even greater.

Sector Rotation in Decline: Divergent Performance of Bitcoin, Ethereum, and Altcoins

This market downturn exhibits clear sector rotation characteristics, with different asset classes experiencing varying degrees of pressure. Bitcoin, as the largest market cap cryptocurrency, has played a leading role in this decline.

A drop of over 50% from its all-time high directly triggered a downward trend across the entire market. Compared to Bitcoin, Ethereum has faced more pronounced pressure. According to Gate Market data, Ethereum has broken below the key $2,637 support level, with the daily chart showing a clear bearish dominance.

The most severe part of the market is concentrated in the altcoin sector. Delphi Digital’s industry dashboard indicates that since January 2025, approximately 97% of altcoins have been in decline, with an average retracement of about 78%. Out of 121 assets, only 3 have recorded gains—HYPE, SYRUP, and BCH. This extreme divergence suggests that during market downturns, capital tends to withdraw from high-risk assets and flow into relatively stable assets.

Chain Reaction of Leverage Liquidations: Fragility of Internal Market Structure

The high leverage structure within the crypto market has amplified the destructive power of this decline. When prices start falling, forced liquidation mechanisms trigger a chain reaction, exacerbating the market slide.

Recent data shows that the scale of liquidations has reached an astonishing level. Different sources report slightly varying figures, but the total passive liquidations across the market are close to $2.6 billion, with most of this concentrated on long positions. This liquidation scale ranks among the highest in crypto market history. The core mechanism of leverage liquidation is that when prices fall to certain levels, exchanges automatically close leveraged positions to ensure system safety. This is not a matter of opinion trading but forced liquidation, which accelerates the price decline.

In the Ethereum market, this is especially evident. Recent data indicates over $553 million worth of ETH positions have been liquidated, with long positions accounting for $523 million, while short positions are only $300,000. This imbalance highlights the systemic risk posed by overly leveraged longs.

Macro Liquidity Tightening: The Link Between Crypto Markets and Global Capital Environment

The recent crypto market crash is closely related to changes in the global macro liquidity environment. A force stronger than “safe-haven” sentiment has emerged—liquidity contraction of the US dollar.

When markets anticipate that the Federal Reserve may delay rate cuts and maintain high interest rates, it effectively tightens the global capital faucet. As the pool of available liquidity shrinks, assets that require deep liquidity to sustain—such as high-risk assets—are the first to be affected.

Bitcoin, known for its high volatility, is naturally among the first to be impacted. Institutional investors, facing rising funding costs, tend to reduce leverage first, selling assets like Bitcoin to raise cash, creating initial selling pressure.

Arthur Hayes, former CEO of crypto exchange BitMEX, pointed out that Bitcoin’s recent plunge fundamentally stems from US dollar liquidity tightening, rather than weakening government support or institutional bearishness on Bitcoin.

Price Forecast and Market Outlook: Analysis Based on Gate Market Data

According to the latest data from Gate platform as of February 6, 2026, Bitcoin’s current price is $64,804.6, with a 24-hour trading volume of $1.93 billion, a market cap of $1.56 trillion, and a market share of 56.80%. Based on historical data and market analysis, the average price of Bitcoin in 2026 may fluctuate around $78,559.7, with an expected range from $58,134.17 to $85,630.07.

For Ethereum, the current price is $1,911.46, with a 24-hour trading volume of $937.63 million, a market cap of $253.2 billion, and a market share of 10.01%. Market forecasts suggest that the average price of Ethereum in 2026 could be around $2,088.27, with a fluctuation range from $1,399.14 to $3,007.1. These forecast figures are based solely on historical data and market conditions; actual prices may vary significantly due to multiple factors. Investors should closely monitor market changes and make decisions aligned with their risk tolerance.

Structural Changes and Future Trends in the Crypto Market

This market crash exposes structural issues accumulated during the rapid expansion of the crypto market. As more institutional investors and traditional financial institutions enter the space, the market’s interconnectedness and complexity have increased significantly.

When macro liquidity tightens, the crypto market is no longer isolated but becomes part of the global risk asset portfolio, fluctuating with overall risk appetite.

It is also worth noting that regulatory changes are reshaping market structure. While the US government shows a supportive stance toward cryptocurrencies and institutional adoption accelerates, these factors have not prevented a significant market correction. This clearly indicates that policies can promote product supply, improve trading channels, and generate temporary sentiment premiums but cannot prevent cyclical deep retracements of highly volatile assets.

Market capital flows provide more direct signals of pressure. Data shows that over $740 million has been withdrawn in a single day from more than 140 crypto-themed ETFs, with nearly $4 billion net outflow over the past three months. This capital withdrawal is not limited to spot Bitcoin funds; Ethereum, Solana, and multi-asset products have also experienced significant outflows and net asset value declines. As funds dry up and liquidity thins, the market enters a stalemate of “waiting for a new story or capitulation.” With Bitcoin hovering around $61,000, the market structure is undergoing profound reshaping. Decreasing leverage levels and the squeezing out of speculative premiums may lay the groundwork for a healthier growth cycle ahead.