Bitcoin’s recent fall has triggered one of the biggest loss-taking events in its history, illustrating how quickly market sentiment has shifted after months of strong gains. As prices dropped nearly 10% to around $64,000, Bitcoin hit its lowest level since late 2024. This sharp move pushed many investors to sell their holdings at a loss.
Record Losses in a Single Day
February 5 stood out as a major stress point for the market. On-chain analyst Murphy reported that realized losses reached about $3.2 billion in just one day—the highest daily total ever recorded. Realized losses reflect how much money investors actually lose when they sell below their buying price, making this a strong sign of panic selling.
Murphy noted that this single-day loss was even larger than what was seen during major past crises, including the Terra-Luna collapse and the FTX bankruptcy. This highlights how severe and sudden the latest sell-off has been.
Low Liquidity Made the Drop Worse
The Kobeissi Letter added that the decline was not driven by fear alone. It also exposed weak market liquidity. Bitcoin’s market depth, the amount of money available to absorb large trades, is still more than 30% lower than its October high. With fewer buyers at key price levels, even moderate selling can cause sharp price drops.
The last time market depth was this low was after the FTX collapse in 2022, showing that the market remains fragile during periods of heavy selling.
No Clear Trigger Behind the Sell-Off
Unlike previous crashes caused by major news events, this downturn did not have one obvious trigger. Murphy said that aside from a data adjustment issue in late 2025, the current loss numbers reflect real selling pressure. He also defended using dollar-based loss data, saying it better shows the financial and emotional stress investors feel during sharp declines.
Extreme Price Volatility
The Kobeissi Letter also pointed out another first: Bitcoin recorded a single-day drop of more than $10,000. Even during earlier high-liquidation events, prices did not fall this much in one day. This has led to speculation that a large leveraged trader was forced to exit, which likely accelerated the fall and exposed how risky large positions can be.
How Much Lower Can Bitcoin Go?
Crypto researcher Sherlock highlighted a long-term pattern in Bitcoin’s history. Each bear market has resulted in smaller losses than the previous one, as the asset has matured. Bitcoin fell about 93% in 2011 and around 77% in 2022. If this trend continues, the current cycle could see a drop of roughly 70% from the $126,000 peak, pointing to a possible bottom near $38,000.
This outlook suggests that while the recent sell-off has been painful, it may not be the final low and a quick recovery should not be taken for granted.
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FAQs
Bitcoin is down due to low market liquidity and forced selling from leveraged positions. With fewer buyers, sell orders moved prices sharply lower.
On February 5, investors realized losses of roughly $3.2 billion in a single day—the highest daily loss ever recorded, exceeding losses seen during the Terra-Luna and FTX collapses.
Based on historical bear market patterns, Bitcoin could potentially fall around 70% from its $126,000 peak, suggesting a possible bottom near $38,000, though market conditions remain fluid.
No single news event triggered it. The drop appears driven by market structure, leverage unwinding, and fragile liquidity conditions.
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