In a dramatic turn of events, Bitcoin’s price has plummeted to $81,201, marking its lowest level in over two months and representing a 14.5% decline over the past 16 days. The decline, spurred on by ongoing market volatility, has sent ripples of fear through the crypto community, as indicated by the Crypto Fear & Greed Index, which now stands at 16, reflecting extreme fear among investors.
The crypto market faced a massive liquidation wave, with total forced closures reaching $1.68 billion in just 24 hours. Notably, 93% of these liquidations were tied to long positions, impacting around 270,000 traders whose positions were forcibly closed as they failed to meet margin requirements amidst plunging prices.
This surge in liquidations comes amid broader sell-offs across major cryptocurrencies, with Bitcoin being particularly vulnerable. Additionally, U.S. spot Bitcoin ETFs experienced significant outflows, with $817 million withdrawn on Thursday alone, led by BlackRock’s IBIT fund, which saw about $318 million exit.
The current dynamics present an intriguing potential for a short squeeze. Data reveals that over $6.5 billion in short positions could face liquidation if Bitcoin prices rebound toward $92,000. In stark contrast, a drop to $72,600 would only endanger approximately $1.2 billion in positions.
Despite the ongoing price retracement, Binance’s open interest has risen by 31% since October 2025, climbing from 93,600 BTC to 123,500 BTC. This increase indicates that traders may not be exiting the market entirely but are instead recalibrating their exposure amid the current volatility.
Trading activity has remained concentrated on major exchanges, with Binance leading the way, accounting for approximately $378 billion in monthly Bitcoin futures volume. The total futures volume across exchanges has dropped to about $1.09 trillion in January, the lowest since 2024.
The recent price movements swept through swing lows between $80,000 and $83,000, effectively clearing out a cluster of long positions and potentially setting the stage for a recovery. Analysts suggest that if prices were to rise, short sellers could be forced to close their positions, further propelling Bitcoin higher.
As a noteworthy observation, crypto commentator MartyParty noted the rapid price action is reminiscent of a Wyckoff Accumulation “Spring” pattern, where prices dip below support levels to shake out weaker hands before a bullish reversal. Such technical movements are critical for discerning future price trends and market sentiment.
Moreover, market uncertainties are exacerbated by external factors, particularly regarding U.S. monetary policy. President Trump has expressed intentions to announce a candidate to replace Federal Reserve Chair Jerome Powell, stirring speculation about potential shifts in economic policy. Reports have indicated that former Fed governor Kevin Warsh may be the nominee, a choice that could lean toward advocating for a tighter monetary stance.
As of the latest updates, Bitcoin remains on shaky ground, trading down by 4.5% at $83,080. Market conditions suggest a broader risk-off sentiment, with the dollar gaining strength and yields rising amid prevailing uncertainty.
