Bitcoin Struggles Below $80,000 Amid Market Liquidations
By John Nada·Feb 2, 2026·2 min read
Bitcoin's struggle below $80,000 reveals market vulnerabilities, as liquidations surge and traders shift strategies toward downside protection.
Bitcoin's recent drop has exposed vulnerabilities in prediction markets, as options traders scramble for protection while liquidations mount. According to CoinDesk, the latest volatility in Bitcoin has prompted a significant shift in strategies among traders, with a marked increase in open interest for $75,000 put options. This reaction underscores how quickly derivatives markets can respond to tail risks, with over $500 million in leveraged long positions liquidated in just 24 hours. Meanwhile, prediction markets have adjusted slowly, revealing a disconnect between short-term volatility and long-term expectations. Despite never crashing below $75,000, Bitcoin's failure to bounce back to anticipated levels has highlighted the complexities of market dynamics.
In January, Polymarket contracts suggested a gradual softening of price expectations, yet they didn't account for the rapid liquidation event that occurred. The report noted that prediction markets, which measure end states, often ignore short-term volatility unless it alters the final outcome belief. This structural issue contrasts sharply with derivatives desks, which are compelled to react immediately to emerging risks. The divergent responses of these markets illustrate differing approaches to risk assessment, with traders in options markets prioritizing immediate downside protection.
As Bitcoin hovered just under $80,000, Ether struggled near $2,300, mirroring a broader sentiment of caution among traders. Gold also experienced a pullback, trading around $4,750 per ounce after testing higher levels earlier in the week. The mixed performance in Asia's markets reflects a delicate balance as investors digest various economic signals, including data on China's factory activity.
In essence, the current market situation serves as a reminder of the inherent risks in crypto trading. The juxtaposition of structural optimism and sudden drawdowns reaffirms the need for traders to navigate these waters with caution. The challenges faced by Bitcoin and other cryptocurrencies highlight the importance of risk management strategies amid a landscape marked by unpredictable volatility.