Crypto Bloodbath Overnight: Bitcoin Crashes Below $78,000 Triggering $1.4 Billion in Liquidations
Published Date: 4th Feb, 2026
February 04, 2026
Cryptocurrency markets endured a violent overnight collapse Tuesday into Wednesday, with Bitcoin plunging more than 9 percent to fresh 2026 lows near $77,400 before clawing back slightly to hover around $79,000. The sharp drop erased billions in market value in hours, unleashing a cascade of forced liquidations and sending shockwaves through leveraged trading positions across major exchanges.
The selloff unfolded rapidly during thin Asian and early European hours, catching many traders flat-footed and amplifying downside momentum through clustered stop-loss orders.
Massive Liquidations Fuel the Decline
Tracking platforms reported over $1.4 billion in cryptocurrency positions liquidated within a 12-hour span, with longs comprising nearly 91 percent of the forced closures. Bitcoin accounted for the lion's share at more than $850 million, while Ethereum and leading altcoins contributed heavily to the total carnage.
The breach of key support levels around $82,000 triggered a classic cascade effect, as automated sell orders and margin calls compounded the initial selling pressure into full-scale capitulation.
Key Triggers Behind the Rout
Several converging factors drove the sudden reversal:
- A resurgent U.S. dollar index gained sharply after comments attributed to Federal Reserve nominee Kevin Warsh emphasized institutional stability and a cautious approach to monetary easing, reducing expectations for aggressive rate cuts.
- Heavy profit-taking following Bitcoin's parabolic run through late January, when prices briefly flirted with $105,000 amid earlier safe-haven buying.
- Substantial outflows from spot Bitcoin exchange-traded funds, with single-day redemptions surpassing $750 million according to some estimates, reflecting institutional risk reduction.
- Broader macro caution ahead of critical U.S. employment data later this week, which added to pressure on high-beta risk assets including cryptocurrencies.
Ethereum shed around 10 percent to trade near $2,520, while major altcoins posted losses between 12 and 20 percent. Total crypto market capitalization shrank by more than 8 percent during the session.
On-Chain and Technical Picture
On-chain data showed accelerated distribution from long-term holders near recent resistance zones, though certain large wallets continued absorbing supply on the dip. Perpetual futures funding rates plunged deeply negative, confirming overwhelming bearish sentiment among leveraged participants.
Shorter-term momentum indicators reached oversold levels, potentially setting up a relief bounce if selling exhaustion emerges. However, sustained weakness below $80,000 could expose deeper support zones around $75,000 and $70,000 in more extended correction scenarios.
Outlook Remains Volatile
With U.S. nonfarm payrolls figures due this week and uncertainty surrounding the Federal Reserve leadership transition, cryptocurrency traders face continued choppy conditions. The overnight plunge served as a stark reminder of the asset class's extreme sensitivity to dollar strength, macro policy shifts, and shifts in risk appetite.
While some view the correction as a necessary cooldown after an overheated advance, others caution that persistent dollar momentum and risk-off flows could extend the downside pressure. For the moment, the digital asset space remains in a high-tension consolidation phase, with participants watching intently for signs of stabilization or additional capitulation in the days ahead.
Date: 4th Feb, 2026
