Bitcoin plunges toward $60,000 in sell-off reminiscent of FTX collapse
The cryptocurrency market suffered its sharpest downturn since the FTX collapse, with Bitcoin breaking below the $60,000 level overnight and posting a daily decline of more than 10%. The move marked the steepest one-day drawdown since November 2022, when panic selling swept through digital asset markets. Bitcoin's fall accelerated during global trading hours as selling pressure intensified across spot and derivatives venues.From its all-time high near $126,000 reached in October 2025, Bitcoin has now lost close to half of its value. The scale and speed of the decline have drawn comparisons to previous crisis phases, as liquidity thinned and leveraged positions were rapidly unwound.
Sentiment collapses as fear reaches extreme levels
Market sentiment deteriorated sharply alongside the price action. The Crypto Fear and Greed Index dropped to 9 out of 100, a level classified as "extreme fear" and previously observed only during the height of the FTX-driven market collapse. Such readings typically reflect widespread capitulation, forced selling, and a near absence of risk appetite.The broader impact extended well beyond Bitcoin. Since the October peak, total cryptocurrency market capitalization has declined by roughly $2 trillion, underscoring the depth of the correction and the degree to which capital has exited the sector over a relatively short period.
Institutional losses come into focus
The downturn has been particularly visible among large institutional holders. Strategy, formerly known as MicroStrategy, reported a quarterly loss of $12.4 billion for the fourth quarter of 2025, one of the largest quarterly losses ever disclosed by a public company. The result reflected the sharp decline in Bitcoin prices and the scale of the firm's exposure.Strategy's shares fell 17% in a single session following the disclosure and are now down more than 70% from their highs. The company holds approximately 713,502 BTC at an average purchase price of $76,052, placing its entire Bitcoin treasury at an estimated unrealized loss of about 15% at current market levels.
Miners under pressure as costs exceed prices
Stress has also emerged within the mining sector. Marathon Digital, one of the largest publicly traded Bitcoin miners, transferred 1,318 BTC worth roughly $87 million to various trading desks and exchanges, including Two Prime, BitGo, and Galaxy Digital. The move fueled speculation about potential sales, although the company continues to hold approximately 52,850 BTC valued at around $3.42 billion.The timing of the transfers has raised concern because average mining production costs are now estimated to exceed $87,000 per bitcoin, while spot prices are trading closer to $65,000. This gap implies that a significant portion of the mining industry is operating at a loss, increasing the risk of forced selling or consolidation if prices remain depressed.
ETF outflows and liquidations deepen the drawdown
Institutional demand through regulated products has also reversed. Between November 2025 and January 2026, spot Bitcoin exchange-traded funds recorded net outflows of approximately $6.18 billion, marking the longest and largest sustained withdrawal period since their launch. Average entry prices for ETF investors are estimated near $87,830, meaning the majority of positions are currently underwater.Leverage amplified the sell-off. Over the past 24 hours, more than $1 billion in crypto positions were liquidated, with roughly $980 million tied to long positions. The cascade of forced closures accelerated downside momentum as key technical levels failed in rapid succession.
Long-term outlook remains contested
Despite the severity of the downturn, some long-term assessments remain cautiously constructive. JPMorgan noted in a recent report that, on a volatility-adjusted basis, Bitcoin has become more attractive relative to gold, assigning a theoretical long-term valuation near $266,000. The bank, however, emphasized that such a level is not realistic in the near term given current macroeconomic and market conditions.Strategy's balance sheet provides some buffer against immediate distress. The company holds approximately $2.25 billion in cash, sufficient to cover dividend obligations for more than two years, with no major debt maturities until 2027. As a result, analysts do not anticipate near-term insolvency despite the scale of unrealized losses.
Historically, Bitcoin has endured comparable drawdowns. The 2018 bear market saw losses of roughly 74%, while the 2021-2022 period included successive collapses tied to regulatory pressure and the FTX scandal. In each case, recovery took around 18 months, suggesting that while the current decline is severe, it is not without precedent in the asset's history.
Editorial Team - CoinBotLab
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