Bitcoin Takes a Dive: Is This the End or Just a Dramatic Pause?

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Markets

What to know:

  • In a shocking twist of fate, Bitcoin plunged to a mere $60,000-its lowest level since October 2024, which is about as pleasant as stepping on a Lego in the dark. This plunge comes with one of the most oversold readings in its history, suggesting we might be due for a bounce sharper than a hyperactive kangaroo.
  • In a frantic display of market gymnastics, over $2.6 billion in futures positions were liquidated within the blink of an eye (or a slightly longer blink if you’re sleepy), mostly from long positions as the vital $70,000 support crumbled like a poorly made soufflé.
  • While altcoins and DeFi got hit harder than a piñata at a toddler’s birthday party, some tokens like DCR and HYPE emerged like superheroes in a poorly written comic, as investors scurried back to the safety of Bitcoin and stablecoins.

Thursday was not just any day; it was a cataclysmic selloff that would make even the most stoic of market analysts weep into their overpriced organic coffee. Bitcoin, in a dramatic flair, tumbled down to $60,000, marking its lowest point since October 2024. It was so dramatic even Shakespeare would have taken notes.

This plummet resulted in Bitcoin being designated the third most “oversold” in its history, according to the mystical relative strength index (RSI)-a kind of magical crystal ball that tells us when things are too extreme and likely ready for a wild comeback.

But fear not! As Asia woke up from its slumber, Bitcoin bounced back from the depths of despair, leaping back above $65,000, while ether dusted itself off from a low of $1,750 to rejoin the party at $1,920. It’s like watching a sitcom where the characters keep getting back together despite all odds.

Still, the broader crypto market continues to suffer from what can only be described as a bear market that’s as stubborn as a mule with a penchant for napping. Zcash has lost 34% of its value this past week, while optimism, Solana, and ether are all nursing wounds around 30% losses.

Traditional markets, meanwhile, have been experiencing their own existential crisis. The Nasdaq 100 index took a nosedive of 6% since January 28, and precious metals Gold and Silver have decided to play hide and seek, hiding 12% and 38% from their previous values, respectively.

Derivatives positioning

  • The crypto futures market has shrunk to less than $100 billion for the first time since March 2025, as traders-those brave souls-continue to reduce risk faster than you can say “market volatility” while liquidations cause enough wealth destruction to give a Greek tragedy a run for its money.
  • Over $2.6 billion in leveraged futures bets have been forcibly shut down by exchanges due to margin shortages, with most of that coming from long bets. It’s like watching a high-stakes poker game where everyone suddenly realizes they’ve been playing Go Fish instead.
  • Open interest (OI) has declined in futures tied to all major tokens, including the recent overachiever HYPE. It’s almost as if everyone decided to take a collective vacation.
  • Annualized perpetual funding rates for major tokens like BTC, SOL, XRP, and DOGE have flipped negative like a pancake on a Sunday morning as price crashes trigger a demand for bearish bets. Arbitrageurs might find themselves resorting to reverse cash and carry bets-whatever that means!
  • Bitcoin’s annualized 30-day implied volatility spiked to nearly 100% late Thursday as traders scrambled to buy puts, with some becoming so anxious they snapped up bearish bets at strike prices as low as $20,000. Since then, volatility has calmed down to below 70%, but who really knows how long that will last?
  • Short-term put options for bitcoin and ether continue to trade at a volatility premium that’s higher than your average college essay, indicating lingering worries about downside. Puts remain pricier at the long end as well-because why not add more drama to this soap opera?
  • Options linked to BlackRock’s IBIT ETF saw record activity on Thursday, with traders rushing to buy puts as if they were the last donut in a box. The one-year skew climbed to over 25 points, reflecting a massive premium for put options, indicating that peak fear has officially set in-pass the popcorn!

Token talk

  • Despite the chaos, the altcoin sector unearthed a couple of surprise winners on Thursday. Privacy-focused Decred rose by an astonishing 31% in 24 hours, seemingly unfazed by the carnage, as it lifted itself from $17.4 to $24.2-like a phoenix rising from the ashes.
  • HyperLiquid’s HYPE token has managed to hold its head high, remaining up 11% this week, despite a minor 4% dip in the last 24 hours-talk about resilience!
  • XRP went on a rollercoaster ride, plunging more than 30% before bouncing back by 21%. Trading volume topped a staggering $14 billion, marking a 143% rise over 24 hours-these numbers make a math teacher’s head spin!
  • The CoinDesk 20 (CD20) and CoinDesk 80 (CD80) both dropped around 6% in the past 24 hours, but the real drama unfolded in the DeFi sector, with the DeFi Select Index (DFX) underperforming the wider market with a decline of over 10%. It’s like watching a slow-motion train wreck.
  • CoinMarketCap’s “altcoin season” indicator is now at 24/100, down from Wednesday’s high of 32/100, implying that investors are scrambling toward safer assets like Bitcoin or stablecoins, which might be the equivalent of grabbing a life jacket on the Titanic.

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2026-02-06 15:54