The Fastest Unraveling Since FTX
Bitcoin hit an all-time high above $120,000 in October 2025. Four months later, it touched $60,000. A 50% drawdown in a single cycle, with no exchange collapse, no protocol exploit, and no regulatory ban to point at.
On February 5 alone, Bitcoin registered a -6.05 sigma move on the rate-of-change Z-score, placing it among the fastest single-day crashes in the asset's history. The broader drawdown erased roughly $600 billion in Bitcoin market capitalization. Ethereum fared worse, sliding from above $4,000 to approximately $2,000, a decline that has reignited questions about whether the market has entered another prolonged winter.
VanEck's head of digital asset research, Matthew Sigel, published a detailed post-mortem identifying five distinct forces behind the selloff. CNBC's ETF analysts, looking at the same wreckage, reached a different conclusion: this is painful, but it is not 2022.
Both perspectives matter. Understanding which one is right determines whether crypto holders should be buying the dip or bracing for a longer downturn.
VanEck's Five Triggers
Sigel's analysis rejects the idea that any single catalyst caused the crash. Instead, five forces converged simultaneously, each amplifying the others.
1. Leverage Collapse
Crypto markets experienced $3 to $4 billion in total liquidations, with an estimated $2 to $2.5 billion concentrated in Bitcoin futures alone. The forced selling was meaningful but, according to VanEck, not yet climactic. Open interest on major derivatives exchanges dropped roughly 30% from January peaks, suggesting the market shed a significant portion of its speculative excess but may not have fully flushed.
2. The AI Trade Unwinding
Bitcoin's correlation with tech stocks, particularly the software sector, tightened throughout late 2025. When the AI narrative that had lifted the Nasdaq began to crack, Bitcoin followed. CoinDesk reported that BTC was increasingly behaving like "just another software name," and that was bad news when software stocks entered their own correction. The February 5 crash coincided with a 3% single-day drop in the broader software sector index.
3. A Hawkish Fed Chair
Kevin Warsh's appointment as Federal Reserve Chair raised expectations for balance sheet reduction and hawkish monetary policy. Rate cut expectations, which had been a tailwind for risk assets throughout 2024 and early 2025, evaporated. The revised U.S. labor data showing far weaker 2025 job growth has since reopened the door to cuts, but the damage to sentiment was already done.
4. Miner Sell Pressure
As Bitcoin's price fell and financing conditions tightened, miners faced pressure to sell holdings to support balance sheets and capital expenditures. This added incremental spot supply at the worst possible moment. Miner selling tends to be gradual, but during rapid price declines it creates a feedback loop: lower prices force more selling, which pushes prices lower.
5. Quantum Computing Governance Concerns
Renewed discussion of long-term quantum computing risks and post-quantum security re-entered the conversation. While no near-term threat exists, the governance implications, how Bitcoin's development community would respond to a genuine quantum breakthrough, raised uncomfortable questions. We covered Nic Carter and BlackRock's debate on this topic earlier in February.
The Capitulation Came in Two Waves
On-chain data from Checkonchain reveals that the selloff was not a single event but two distinct capitulation waves separated by three months.
The first wave hit in November 2025, when Bitcoin fell to approximately $80,000. That selling was dominated by "class of 2025" investors, holders who had accumulated throughout the year and whose conviction broke during exhaustion-driven sideways trading. This cohort accounted for 95% of realized losses during the November event.
The second wave arrived in early February 2026, driving Bitcoin to $60,000. This time, the seller composition shifted. The February capitulation was split roughly evenly between class of 2025 holders and a newer group: class of 2026 dip-buyers who had entered between $80,000 and $98,000, expecting a quick bounce that never materialized.
The numbers are stark. On February 7, short-term holders realized $1.14 billion in single-day losses. Long-term holders added another $225 million. The net realized loss rate peaked at approximately $1.5 billion per day during the heaviest window. Futures volume spiked to $107 billion daily, nearly double the $62 billion baseline. Options volume doubled since January to $12 billion daily, with IBIT options alone reaching $4 billion daily.
Why CNBC Says This Is Not a Crypto Winter
Despite the severity of the drawdown, CNBC's ETF Edge analysts argue the underlying data tells a different story than 2022.
The key metric: BlackRock's iShares Bitcoin Trust (IBIT) has seen approximately $2.8 billion in net outflows over the past three months. That is substantial. But over the past twelve months, IBIT attracted nearly $21 billion in net inflows. The outflows represent roughly 13% of annual inflows, a correction within a strong trend rather than a reversal.
Compare this to the 2022 crypto winter, when Grayscale's Bitcoin Trust (GBTC) traded at a persistent 40%+ discount to NAV for over a year, institutional products saw virtually no new capital, and major allocators publicly abandoned crypto positions. None of those dynamics are present today.
The SOL and XRP ETF inflows we reported on earlier this week reinforce the point. Capital is rotating within crypto, not fleeing it entirely. Solana and XRP products posted net inflows in the same week that Bitcoin and Ethereum funds bled $838 million.
JPMorgan analysts added fuel to the counter-narrative, stating they remain "positive on crypto markets for 2026" and expect institutional flows to drive recovery. The distinction between retail panic and institutional patience appears to be widening.
SpendNode's Take: Orderly Deleveraging, Not Structural Collapse
We think VanEck's framing is correct: this is orderly deleveraging, not capitulation in the 2022 sense. The five triggers Sigel identifies are all real, but none of them represents a permanent impairment to crypto's value proposition.
Leverage needed to be flushed. The AI correlation will weaken as narratives diverge. Warsh's Fed has not yet acted, and the labor data revisions give doves ammunition. Miner selling is cyclical and self-correcting as weaker operators exit. Quantum computing remains a decade-plus threat that the development community is actively addressing.
The more interesting signal is the two-wave capitulation structure. The fact that February's sellers included dip-buyers from just weeks earlier suggests that the "buy the dip" reflex has been broken for now. That is actually healthy. Markets bottom when the last optimistic buyer gives up, not when pessimists pile on.
What concerns us is Ethereum's relative weakness. A 50% drawdown in ETH, combined with ongoing staking ratio compression and the Ethereum Foundation leadership instability (co-executive director Tomasz Stanczak stepping down at month's end), paints a picture of an ecosystem under stress. Bitcoin's narrative as digital gold provides a floor. Ethereum's narrative is muddier right now.
What Crypto Card Holders Should Do During a 50% Drawdown
A drawdown of this magnitude changes the math for anyone spending crypto through cards. Here is what we recommend.
Park spending in stablecoins. If you are using a card that auto-converts BTC or ETH at the point of sale, every purchase locks in losses during a drawdown. Cards that let you load and spend stablecoins directly avoid this problem entirely. USDC and USDT balances do not decline with the market.
Accumulate cashback, do not spend it. Cards offering crypto cashback rewards become more attractive during drawdowns because you are receiving crypto at depressed prices. If Bitcoin recovers to $100,000 from $60,000, that 2% cashback earned today is worth 67% more in dollar terms.
Avoid unstaking to fund spending. If you hold staked positions through cards like ether.fi's tiered products, unstaking during a drawdown crystallizes losses and forfeits yield. Use stablecoin top-ups for daily spending and let staked positions compound through the recovery.
Watch FX fees closely. Volatile markets often widen the crypto-to-fiat conversion spreads that card providers embed in transactions. Cards with zero FX markup become relatively more valuable when spreads on other products blow out.
FAQ
How far has Bitcoin fallen from its all-time high? Bitcoin peaked above $120,000 in October 2025 and touched approximately $60,000 in early February 2026, a decline of roughly 50%. It has since stabilized near $69,000.
What was the -6.05 sigma move on February 5? A sigma move measures how many standard deviations a price change is from the mean. A -6.05 sigma event is statistically expected to occur less than once in a billion observations under normal distribution, making the February 5 crash one of the most extreme single-day moves in Bitcoin's history.
Is this a crypto winter? CNBC's ETF analysts say no. While Bitcoin ETF outflows have been significant ($2.8 billion from IBIT in three months), annual net inflows remain strongly positive at nearly $21 billion. Institutional commitment through regulated products has not broken down the way it did in 2022.
What were VanEck's five triggers? Leverage collapse ($3-4 billion in liquidations), the unwinding of the AI-correlated tech trade, Kevin Warsh's hawkish Fed appointment, miner sell pressure from tightening financing, and renewed quantum computing governance concerns.
Should I sell my crypto during a 50% drawdown? SpendNode does not provide financial advice, but historically, selling after a 50% drawdown from all-time highs has been the worst possible timing for Bitcoin holders. Every previous 50%+ drawdown has eventually recovered to new highs, though recovery timelines have ranged from months to years.
Overview
Bitcoin's 50% crash from $120,000 to $60,000 was driven by five converging forces identified by VanEck: leverage collapse, AI trade unwinding, a hawkish Fed chair appointment, miner sell pressure, and quantum computing governance fears. On-chain data shows the capitulation arrived in two distinct waves (November 2025 and February 2026), with the second wave catching dip-buyers who entered between $80,000 and $98,000. Despite the severity, ETF flow data suggests this is orderly deleveraging rather than a structural crypto winter, with institutional commitment through regulated products remaining intact.
Recommended Reading
- SOL and XRP ETFs Attract Inflows While BTC and ETH Bleed $838 Million
- U.S. Labor Data Reveals 2025 Job Growth Was a Mirage
- Nic Carter Says BlackRock Should Fire Bitcoin Developers Over Quantum Threat
