Crypto Market Plummets as Fear Grows and Liquidations Skyrocket
By John Nada·Feb 5, 2026·2 min read
Bitcoin and Ethereum drop over 7% amid heightened market fear and $800 million in liquidations. Traders brace for further downside as key support levels are tested.
Bitcoin and Ethereum have both dropped over 7% as fear grips the crypto market, with the Fear and Greed index hitting its lowest level this year at 11. According to CoinDesk, more than $800 million in leveraged positions were liquidated within 24 hours, leading to a significant decline in open interest, which now stands at $103 billion.
Traders are on high alert as Bitcoin hovers just above a critical support level of $70,000. Analysts warn that breaking below this threshold could spark further selling pressure. Alex Kupsikevich, chief market analyst at The FxPro, notes that Bitcoin's return to a previously strong resistance area has attracted some bargain hunters, but the macroeconomic environment remains challenging.
Geopolitical tensions, particularly between the U.S. and Iran, have resulted in elevated oil price volatility, contributing to a broader risk-off sentiment among investors. This has further dampened appetite for higher-beta assets like XRP, which also suffered significant losses, dropping more than 10% due to over $30 million in liquidations.
The derivatives market is reflecting peak fear, with options trading indicating a strong preference for puts over calls, suggesting that bearish sentiment is dominating. Meanwhile, the altcoin market followed suit, with notable declines in privacy coins like Monero and Zcash, both down around 7%. Yet, amidst the chaos, the MYX token managed a 4% gain, defying the overall downtrend.
The CoinDesk 20 Index, which is Bitcoin-heavy, lost 8.34% in the last 24 hours, contrasting with the CoinDesk 80 Index, which experienced a smaller decline of 5.92%. This divergence underscores the growing volatility and uncertainty in the market, with many altcoins showing signs of a deep downtrend reminiscent of the bear market of 2022.
In summary, the current state of the crypto market indicates heightened fear and uncertainty, with significant liquidations and bearish sentiment pushing prices lower. Traders are advised to remain cautious as the potential for further downside looms if key support levels fail. The implications for the market are clear: without a shift in sentiment or macro conditions, the path forward could be rocky for many cryptocurrencies.