Bitcoin: Failure to Reclaim Key Level Keeps Price Locked in Sell-the-Rally Phase

• Bitcoin lost roughly 50 percent as tight liquidity and macro shocks overwhelmed bullish narratives.
• Higher interest rates, ETF outflows, and rising Nasdaq correlation weakened Bitcoin’s risk appeal.
• Miner selling and technical breakdowns now define whether prices stabilize or fall further.

Bitcoin started falling from its peak near $126,000 in late 2025, and that drop picked up speed again in early February 2026. Prices have since fallen by about 50%, slipping into the low $60,000 range. This move did not come from one single event. It was driven by several forces at the same time, including political and macro shocks, tighter liquidity in markets, and growing doubts around Bitcoin’s role as digital gold.

As a result, the market focus has shifted away from short-term price moves and toward what could help stabilize the trend. Key pressures include the Federal Reserve keeping interest rates high, ETF flows turning negative, Bitcoin moving more closely with the Nasdaq, and weaker miner profits adding extra selling pressure.

Macro-Political Ground: The Warsh Shock and Expectations of Higher Interest Rates for Longer

President Donald Trump’s nomination of Kevin Warsh as Fed chair changed how markets view the Federal Reserve. Investors no longer assume the Fed would quickly step in to stop sharp market declines. Instead, markets have started pricing in a period of higher real interest rates for longer. After the nomination, Bitcoin dropped quickly from around $90,000 to $81,000, and selling pressure increased across assets that rely heavily on easy liquidity.

At the same time, the Fed kept interest rates unchanged at 3.50–3.75% at its January meeting, while inflation for December stayed elevated at 3.4%. This forced investors to scale back expectations for aggressive rate cuts. JPMorgan’s view that the Fed could stay on hold through 2026, with unemployment around 4.4%, reinforces this shift. Higher risk-free returns make assets like crypto less attractive, weakening their risk-reward balance.

Geopolitical Risk Perception: Bitcoin Did Not Act Like a ’Crisis Asset’

Rising tensions between the US and Iran in early 2026 increased fear in the markets. Investors moved money into traditional safe havens like the dollar and government bonds. Bitcoin, however, was sold as traders faced margin calls and closed positions to raise cash. This once again showed that Bitcoin does not behave like a crisis-safe asset during periods of stress.

At the same time, strong protectionist tariff language from the Trump administration raised concerns about global economic growth. That pressure hit technology stocks first and then spread to other risky assets. As a result, weakness in tech stocks increasingly spilled over into crypto markets, pushing the correlation between Bitcoin and the Nasdaq 100 up to around 0.80.

Institutional Flows: ETFs Shifted from Safe Haven to Mechanical Selling

Spot Bitcoin ETFs, which powered much of the rally in 2024 and 2025, turned into a major source of weakness during the 2026 selloff. When money flows out of these ETFs, fund managers have to sell Bitcoin in the open market. That selling pushed prices lower, which then triggered even more outflows. According to Galaxy Digital, once Bitcoin fell below $84,000, the average price at which ETFs bought in, stop-loss selling increased sharply and added to the pressure.

The initial selling came from the spot market, but the decline accelerated in derivatives as traders were forced to cut leverage. Liquidations quickly ran into the billions, creating a chain reaction as key support levels broke.

Funding rates turning negative showed that bearish sentiment had taken over. At the same time, total open interest in crypto derivatives fell by about 22% in a month, dropping from $815 billion to $638 billion. This reflected a broad clearing of leverage. The sharp swings and forced selling also discouraged institutional investors, pushing many of them to step back from the market.

The ’Digital Gold’ Test: Bitcoin Breaks Down as Gold Surges

One of the biggest failures during the 2026 downturn was Bitcoin’s inability to act as a safe haven compared with gold. In January 2026, gold climbed above $4,900 and briefly tested $5,600, while silver rose more than 30%. Over the same period, Bitcoin fell as much as 40%. This sharp contrast was widely seen as a major break in the idea that Bitcoin protects value during market stress.

As a result, investor thinking has shifted. The question is no longer when Bitcoin will rise, but whether it can rise without abundant liquidity. This shift places Bitcoin firmly in the category of a liquidity-driven risk asset rather than a defensive one.

At the same time, falling prices and rising costs forced miners to sell more Bitcoin, adding extra supply to the market. Data from CryptoQuant shows the miner profit and loss sustainability index dropping to 21, while the Puell Multiple fell to 0.67. Both readings signal that miners are operating in an extremely low payout environment.

Miners with strained cash flows have been moving reserves to exchanges to sell, while a drop in hash rate has triggered a bearish “death cross” signal on the Hash Ribbons indicator. Together, these signals suggest that selling pressure may continue as the market searches for a bottom. The sharp declines in publicly listed mining stocks such as Riot and Marathon further weakened confidence and risk appetite across the broader crypto market.

Bitcoin Technical Outlook: Potential for a Rebound, but Thresholds Are Tough

On the daily chart, Bitcoin has broken below several key Fibonacci levels during the recent sharp sell-off. The rise in trading volume and the shakeout-style price action increase the chances of a short-term bounce. However, for any recovery to turn into a lasting trend, the price must first move back above $70,000. Beyond that, weekly closes above $84,000 are needed, as this level is widely tracked as the institutional cost base.

In the near term, Bitcoin is trying to hold the middle area of the Fibonacci expansion zone. The $62,800 level, marked by the 1.272 Fibonacci extension, is the first major support. If daily closes continue to hold above this zone, price could attempt a recovery toward the $69,300 area. If buying momentum builds further, the next recovery zone lies between $76,000 and $78,000. Holding above this range would place Bitcoin back into a consolidation phase and reduce the risk of further downside.

If the $62,800 support fails, the technical picture weakens. The next downside level would sit near $55,000, aligned with the 1.414 Fibonacci extension. A break below that area opens the door to a deeper move toward the $45,000 region, corresponding to the 1.618 extension.

As a result, price behavior around $62,800 is critical for the short-term outlook. This level attracted rebound buying at the end of last week. Holding it could allow the market to stabilize, while a clear break lower would likely bring another wave of selling pressure.

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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.