Bitcoin drops below $60,000: Why are global risk assets plunging simultaneously?
Recently, the cryptocurrency market experienced a significant decline, with Bitcoin falling below the $60,000 mark. This sudden drop has raised concerns among investors worldwide.
Many analysts are questioning whether this decline is an isolated event or part of a broader trend affecting other risk assets such as stocks, commodities, and emerging markets.
### Factors Contributing to the Decline
- Rising inflation fears and tightening monetary policies
- Geopolitical tensions increasing market uncertainty
- Profit-taking after previous gains in various asset classes
Investors are advised to stay cautious and diversify their portfolios to mitigate potential risks during this volatile period.

Global risk assets are experiencing a confidence crisis. Gold fell 6.15% on Thursday, and silver dropped 25.06%. The Nasdaq index closed down 1.59%.

Against this backdrop, Bitcoin was not spared, having fallen more than 48% since reaching its all-time high four months ago. The total market capitalization shrank from $4.19 trillion in early October to $2.39 trillion, evaporating nearly 43%.

Market Status: Waterfall Decline and Key Data

On February 6, 2026, the cryptocurrency market experienced intense volatility. Bitcoin briefly dropped 4.8 during U.S. evening trading, hitting a low of $60,033, then quickly rebounded above $65,926.

The “Fear and Greed Index” plummeted to 10, clearly indicating an “extreme fear” state. This sentiment is confirmed by trading data: over the past 24 hours, a total of 586,219 people worldwide faced liquidations, with total liquidation amounts reaching $2.665 billion.

Broader risk assets also declined in tandem. The Nasdaq tech stock index closed Thursday down 1.59%, gold fell 6.15%, and silver plunged 25.06%. This synchronized decline across asset classes indicates a widespread contraction of market risk appetite.

Multiple Factors: From Leverage Liquidations to Macro Shifts

This decline was not caused by a single factor but resulted from multiple pressures working together. Large-scale leverage liquidations were the immediate trigger.

According to CoinGlass data, approximately $700 million worth of crypto positions were forcibly liquidated in just the past four hours. This “decline—liquidation—further decline” vicious cycle created a typical “kill all” stampede effect in the market.

The flow of funds into U.S. spot Bitcoin ETFs has experienced a substantial reversal, becoming a key indicator of institutional attitude change. Deutsche Bank analyst Marion Laboure pointed out that this persistent selling indicates traditional investors are losing interest.

Changes in the macroeconomic environment are also significant. The nomination of Federal Reserve chair candidates has sparked concerns over higher real interest rates and balance sheet reduction. Increasing global economic uncertainty and escalating geopolitical tensions have collectively suppressed market risk appetite.

Market Sentiment: From Extreme Greed to Extreme Fear

Market sentiment has shifted from extreme greed to extreme fear within just a few months. Since reaching its peak last October, Bitcoin has declined over 48%, currently hovering near October 2024 price levels.

This intense volatility has spread throughout the entire crypto ecosystem. Ethereum and Solana have both fallen more than 30% in the past week. Public companies holding large amounts of Bitcoin have also been affected; Strategy Inc. reported a net loss of $12.4 billion in Q4 due to Bitcoin holdings’ decline in market value.

The breach of key psychological price levels has further intensified market panic. The $70,000 level, once considered a crucial support, was broken, triggering larger-scale sell-offs.

Chain Reaction: Cross-Market Spillover and Institutional Dilemmas

The chain reaction from Bitcoin’s plunge is spreading in multiple directions. Not only are other digital assets falling, but traditional financial markets are also feeling the impact.

This week, the total forced liquidation of crypto long and short positions exceeded $2 billion. Market liquidity has significantly weakened, with forced selling dominating.

Institutional investors are particularly distressed. Data from Glassnode shows that the average cost basis for U.S. spot Bitcoin ETF holders is about $84,100, meaning many investors are currently at a loss. Over $740 million flowed out of more than 140 crypto-themed ETFs on Wednesday alone.

Changes in market structure have further increased the correlation between Bitcoin and traditional risk assets. Shiliang Tang, Managing Partner at Monarq Asset Management, stated: “The market is currently experiencing a ‘confidence crisis’.”

Rational Perspective: Historical Drawdowns and Future Outlook

Despite the current extremely pessimistic market sentiment, historical experience may offer some reference. Bitcoin has experienced multiple drawdowns exceeding 40%, with some crashes reaching 80%-90%.

Analysts generally believe that the $60,000 level will be a key testing point. If this support holds, long-term investors and large institutions may enter at this level. But if it fails, the market could further decline toward the $50,000 region.

Some analysts remain cautiously optimistic. Bernstein’s research team believes that the current weakness is likely a “late-stage correction,” not a new crypto winter. They expect Bitcoin to find a bottom around $60,000 in the first half of the year.

Investor Response: Risk Management and Rational Allocation

During periods of intense market volatility, risk management is more important than chasing returns. Investors need to be aware of several major risks: liquidity risk, counterparty and platform risk, as well as asset attributes and compliance risks.

Leverage operations require extra caution. Using leverage means losses can multiply, potentially leading to liquidation. In the current market environment, avoiding excessive leverage is the primary principle to protect capital.

Diversification remains the fundamental investment principle. Vered Frank, founder of Stack Wealth, emphasized: “Relying solely on Bitcoin as a wealth accumulation strategy carries risks.”

Summary

Bitcoin’s price briefly fell below $60,000, then rebounded above $66,000. The total market cap has dropped from a peak of $2.48 trillion to $1.27 trillion.

Michael Burry, the fund manager who accurately predicted the subprime mortgage crisis in the movie “The Big Short,” issued a warning that Bitcoin’s plunge could intensify into a self-reinforcing “death spiral,” causing lasting damage to companies that accumulated Bitcoin over the past year.

As global market risk appetite shifts, the traditional narrative of cryptocurrencies as a hedge is being reevaluated. Ilan Solot, senior global market strategist at Marex, pointed out that recent selling has been driven by multiple factors, including declines in tech stocks, strong gold performance, and broader risk-averse sentiment.

The market may be seeking a new balance, which will require time, fundamental improvements, and collective confidence rebuilding among market participants.