The cryptocurrency market remains under significant pressure, extending a broader pullback despite minor recoveries in some assets. A key driver of the downturn was the industry's tenth-largest liquidation event on January 31, which wiped out $2.56 billion in leveraged positions, primarily from overleveraged longs.
Bitcoin Exchange-Traded Funds (ETFs) recorded three consecutive days of outflows, with a single-day withdrawal of $431 million on February 5. This contributed to Bitcoin's price briefly plunging to $60,000 on February 6 before recovering above $64,900. Analysts point to a confluence of macro factors exacerbating the fear. These include delays in the U.S. CLARITY Act and growing concerns over stagnant U.S. liquidity, amplified by former President Donald Trump's nomination of Kevin Warsh for Federal Reserve Chair.
"We have to accept that reality and possibility," said Jeff Park, CIO of ProCap Financial, commenting on the shifting market dynamics. He noted that while lower interest rates typically stimulate growth, they "may not drive risk-on flows into BTC as strongly as in past cycles," suggesting rate cuts may no longer be the bullish catalyst many expect.
Institutional activity reflected the cautious sentiment. Cathie Wood's ARK Invest sold 119,236 shares of Coinbase (COIN) on February 5, a transaction worth approximately $17.4 million. This sale followed a minor purchase earlier in the week and came as Coinbase shares fell nearly 13% in a session, hitting multi-month lows. Concurrently, ARK Invest redirected nearly the same amount of capital, $17.8 million, into acquiring shares of Bullish (BLSH), an institution-focused digital asset trading platform.
Amid the broader market decline, some altcoins showed signs of recovery. BNB recovered from a drop to around $570 to close near $650 on February 7, while XRP rallied from $1.25 to $1.45 on the same day. However, analysts caution that these rebounds may be shallow, with BNB facing resistance near $730 and XRP targeting its 20-day EMA at $1.71.
Other major altcoins like Chainlink (LINK) and Avalanche (AVAX) were not spared, recording declines of roughly 18% and 15% respectively over a recent seven-day period.
The market turmoil has shifted some investor attention toward early-stage projects. The AI-powered platform DeepSnitch AI was highlighted across sources for raising $1.5 million in its presale, with tokens priced at $0.03906. The project promotes a suite of AI agents for risk scoring, contract audits, and market analysis, with its community discussing potential for significant returns post-launch.
