Current State of the Cryptocurrency Market and the Background to the Sharp Rebound

Bitcoin (BTC) as of 11:00 PM on Monday (Eastern Standard Time) had risen by24 hours, reaching4.2%, and hit$78,662. Earlier that day, there were moments when it briefly fell to around70,000 to roughly75,000 dollars, but then showed a strong rebound. The current price remains below last April's low.

Bitcoin daily chart

Additionally, Ethereum (ETH) rose5.86% to$2,322, and other major altcoins also posted modest gains. However, from a market-wide perspective, the impact of the recent large-scale fund outflows remains pronounced, and price levels are still well below the pre-crash levels.

Ethereum daily chart

According to analysts, the abrupt declines in stocks and cryptocurrencies over the past several days were primarily driven by a “hawkish” signal regarding the Federal Reserve’s policy outlook. In particular, uncertainty surrounding the nomination of the next FRB chair unsettled the market, prompting a reevaluation of U.S. interest rate expectations and accelerating fund withdrawals from risk assets.

Vincent Rui, CIO of Chronos Research, commented on the current market conditions: “This rebound reflects short-covering after a large amount of liquidation, oversold conditions, and stabilization after forced selling has run its course. In liquidity-driven phases where liquidity concentrates in major currencies, Bitcoin and Ethereum tend to be the first to absorb buy orders and drive the recovery.”

U.S. Spot Bitcoin ETF Outflow

The U.S. spot Bitcoin ETF (a regulated investment product) was expected to provide a stable demand pillar for institutional investors, but in the final week of the month it recorded outflows of about$?490 million.

In particular, Thursday saw a daily outflow of$810 million, the largest single-day redemption for 2026. For the month overall, Bitcoin ETF losses reached about$1.6 billion, making it the third-worst performing month on record for these funds.

Data on the broader cryptocurrency investment products and market follows:

・Weekly outflows from crypto asset investment products totaling$1.7 billion.

・From the high in October 2025, institutional assets under management (AuM) decreased by a cumulative$730 billion.

・The outflows were driven by the Fed’s hawkish stance on tightening, profit-taking by large investors (whales), and heightened geopolitical risks.

・Most of the outflows were concentrated in the U.S. market.

・Detailed breakdown: Bitcoin down$13.2 billion, Ethereum down$3.08 billion.

・Bitcoin’s “Fear & Greed Index” shows17, indicating current state of “Extreme Fear.”

・Current Bitcoin price is around$78,638.

・From the peak in October 2025, Bitcoin has fallen about40%, the largest drawdown since the 2022 crash.

Large-Scale Liquidations and Macro-Economic Impacts

Wintermute reported that Bitcoin dipping below the $80,000 psychological level triggered nearly$2.55 billion in forced liquidations. This would rank as the tenth-largest liquidation in crypto history. The factors driving this move include the so-called “Mag7” (Magnificent Seven) tech giants’ earnings missing market expectations, the nomination of Kevin Warsh as next FRB chair, and a rollover in precious metals markets.

Current market volatility reflects macroeconomic uncertainty and a risk-off stance among investors, but industry insiders emphasize it is not a “structural collapse.” Ongoing development of blockchain infrastructure and potential institutional interest remain solid, with a gradual recovery expected toward late 2026.

Liquidity Deterioration and Arthur Hayes’s Perspective

Arthur Hayes, co-founder of BitMEX, provides sharp insights: “In the past weeks, U.S. dollar liquidity has fallen by about$3,000 billion. The primary reason is that the U.S. Treasury’s general account (TGA) balance has risen by about$2,000 billion.”

There is a possibility that the U.S. government is stockpiling cash in preparation for a potential government shutdown, thereby absorbing dollar liquidity from the market. With dollar liquidity tightening, Bitcoin, as a leading risk asset, falling is not economically unusual, according to this view.

February 2nd Crash: Spillover to All Asset Classes

As Bitcoin hit new lows not seen since April 2025, selling pressure accelerated across multiple asset classes. The declines as of February 2 are as follows:

Natural Gas: down15.5%
Ethereum: down10.5%
Silver: down8.0%
Gold: down5.5%
Bitcoin: down5.5%
WTI Crude Oil: down4.5%
Nasdaq 100: down1.5%
S&P 500: down1.2%
Dow Jones Industrial Average (Industrials): down0.8%

In the commodities markets, volatility is historically high. However, gold and silver have shown strong rebounds after the declines, with gold around $1,470 per ounce and silver around $24 per ounce, suggesting persistent demand for safe-haven assets.

Is Bitcoin “cheap” at its current price?

Coinbase’s publication “Charting Crypto: Q1 2026 Edition” (Bitcoin Investor Sentiment Survey for Q1 2026) indicates that both professional and amateur investors view the current price positively.

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(This report has been delivering at the forefront of the market since its inception in2016.)

Cryptocurrency Market Analysis [February 3]