In a stark market analysis, algorithmic trading firm Wintermute has issued a warning that liquidity is being systematically drained from the cryptocurrency market, particularly Bitcoin, as capital rotates into the booming artificial intelligence (AI) sector. The firm's report, released on February 10, 2026, details a "structural transformation" where the "euphoria premium" from pro-crypto political promises has evaporated.
Bitcoin has officially erased all price gains made since President Trump's inauguration in January 2025, following a brutal 13% slide over 48 hours that saw it plummet to a session low of $60,000. This represents a staggering 50% decline from its historic peak of $126,200 in October 2025, wiping out nearly $2 trillion in total crypto market capitalization.
Wintermute attributes the persistent selling pressure to a combination of factors. The firm's internal OTC data shows U.S. counterparties were the main sellers throughout the week, a trend amplified by continuous ETF fund redemptions. The Coinbase premium has been in a discount state since December, confirming ongoing U.S. selling pressure. Meanwhile, "AI-related assets have been continuously absorbing available market funds, crowding out the allocation space for other asset classes."
The market is now characterized by "surrender-style" clearing with high volatility. With spot trading volumes remaining relatively low, leverage has become the dominant factor in price fluctuations. Bitcoin briefly touched the $60,000 level, which acted as key downside liquidity, but the firm warns the asset is now in a phase of "high volatility and choppy price discovery."
The reversal of the so-called "Trump Trade" is linked to unfulfilled legislative expectations, such as the slow pace of the National Bitcoin Reserve initiative and deadlock over the CLARITY Act. The nomination of Kevin Warsh as Federal Reserve Chairman, viewed as a signal for "higher-for-longer" interest rates, acted as a final catalyst, breaking the $88,000 support level.
A "true structural recovery" now hinges on a return of spot demand, a positive Coinbase premium, reversing ETF flows, and stabilizing basis. Wintermute's bottom line is blunt: "For crypto assets to outperform again, AI trading needs to cool down first." The firm expects the market to remain in a "rebuild phase" for the remainder of 2026, where price action will be dictated by regulatory progress and on-chain utility rather than political hope.
