What Triggered Bitcoin’s Major Selloff in February 2026?
February 09, 2026
Read Time 6 MIN
Please note that VanEck may have a position(s) in the digital asset(s) described below.
Note: This commentary was written on February 5, when Bitcoin was trading in the mid-$60,000s.
Key Takeaways
- Deleveraging Without Capitulation: Leverage has been reduced meaningfully, while price action has remained orderly rather than disorderly.
- Statistical Stress, Not Structural Failure: Multiple indicators reflect elevated stress levels, even as underlying market structure and fundamentals remain intact.
- Mean Reversion Bias Emerging: Velocity, distance-from-trend, and positioning measures suggest growing potential for stabilization rather than continued acceleration lower.
Deleveraging is Driving the Bitcoin Drawdown
Bitcoin has experienced a sharp drawdown over the past week, with prices falling roughly 19% and currently trading in the mid-$60,000s. The move has been driven by a rapid unwind of leverage rather than a single liquidation shock.
BTC futures open interest has fallen from roughly $61 billion one week ago to about $49 billion today, a decline of more than 20% in notional exposure in just a few sessions. More broadly, futures open interest peaked above $90 billion in early October ahead of the 10/10 inflection, meaning the market has now shed over 45% of peak leverage.
Bitcoin Price Movement
Bitcoin’s price has declined by a similar magnitude over the same period. This symmetry cuts both ways. On one hand, it suggests leverage has been reduced alongside price rather than driving a disorderly unwind. On the other hand, it implies the market has not yet experienced a classic capitulation event where price overshoots leverage reduction. Over the past week, crypto markets experienced approximately $3 to $4 billion in total liquidations, with an estimated $2 to $2.5 billion concentrated in Bitcoin futures, indicating meaningful but not climactic forced selling.
A Tail-Event Move in Terms of Speed
While the magnitude of the drawdown has been orderly relative to leverage reduction, the speed of the move has been extreme.
On February 5, Bitcoin registered a -6.05σ move on the rate-of-change Z-score, placing it among the fastest single-day crashes in crypto history. In simple terms, σ measures how unusual a move is, and a reading this large means the drop was far bigger and faster than what normally happens. For context:
- COVID crash: -9.15σ
- FTX collapse: -4.07σ
- February 5, 2026: -6.05σ
Source: Crash velocity and ROC Z-score analysis sourced from MarketVector Indexes, research shared by Martin Leinweber as of 2/5/26. Past performance is no guarantee of future results.
This places the recent selloff firmly in tail-event territory. Among the 15 fastest crashes on record, February 5 ranks near the extreme end of the distribution. Historically, events of this velocity tend to exhaust panic selling rather than initiate prolonged cascades, particularly when not accompanied by systemic failure.
Distance From Trend Reaches an Extreme
The most striking signal emerges when viewing Bitcoin’s distance from its long-term trend.
Bitcoin is currently trading -2.88σ below its 200-day moving average, a level not observed at any point in the past 10 years, including during COVID or the FTX collapse. In historical terms, 0.0% of observations have been further below the 200-day moving average.
For comparison:
- BTC: -2.88σ (0.0% of history)
- SOL: -2.05σ (0.3% of history)
- ETH: -1.50σ (5.8% of history)
Source: Distance-from-trend Z-score analysis based on MarketVector Indexes, via research shared by Martin Leinweber as of 2/5/26. Past performance is no guarantee of future results.
This places Bitcoin at an unprecedented distance from its long-term trend, reinforcing the view that price has become statistically disconnected from underlying trend dynamics.
Drawdowns Are Deep but Not Generational
From a drawdown perspective, Bitcoin is now approaching a 50% peak-to-trough decline:
- BTC: -47.5% (worst: -83.6%)
- ETH: -60.7% (worst: -94.0%)
- SOL: -69.5% (worst: -96.3%)
Source: Drawdown distributions and historical comparisons sourced from MarketVector Indexes research shared by Martin Leinweber as of 2/5/26. Past performance is no guarantee of future results.
While these are severe declines, they do not yet represent generational lows. However, the key distinction is that drawdowns of this depth are now coinciding with extreme velocity, extreme distance from trend, and compressed volatility, a combination that historically marks late-stage stress rather than early-cycle deterioration.
Volatility Is Lower Than Prior Bitcoin Bear Markets
Importantly, this drawdown has occurred alongside materially lower realized volatility than in prior bear markets. 90-day realized volatility currently sits near 38, roughly half the levels observed during the 2022 bear market, when realized volatility exceeded 70 and Bitcoin ultimately declined approximately 78% peak to trough.
The combination of a deep price drawdown and materially lower volatility suggests that a significant portion of downside risk has already been absorbed. Absent a new, Bitcoin-specific negative catalyst, relative value dynamics may begin to assert themselves.
Positioning and Mean Reversion Signals Align
Short-term positioning metrics reinforce the view that stress is becoming late-cycle in nature.
Current 7-day declines rank in the 99th percentile of historical outcomes:
- BTC: -22.2% (worse than 98.9% of history)
- ETH: -29.7% (worse than 99.0% of history)
- SOL: -32.0% (worse than 98.8% of history)
Source: Drawdown distributions and historical comparisons sourced from MarketVector Indexes, research shared by Martin Leinweber as of 2/5/26. Past performance is no guarantee of future results.
When markets reach the far tails of negative outcomes, mean reversion becomes increasingly probable. This is echoed in derivatives markets, where funding rates across ETH and SOL have turned negative and Bitcoin funding has compressed sharply, signaling de-risking via position reduction rather than aggressive short formation.
Momentum indicators reflect similar stress. On Bitcoin futures continuation charts, RSI has fallen below 21, an extreme oversold level that has historically preceded periods of stabilization and relief rallies.
Narrative Pressure Without Structural Damage
The selloff has been amplified by deterioration in adjacent risk narratives. Weakness in the AI trade has spilled into crypto, particularly impacting miners pursuing AI and high-performance computing strategies. As financing conditions tightened, miners faced pressure to sell Bitcoin to support balance sheets and capex, adding incremental spot supply at a fragile moment.
At the same time, governance concerns and renewed discussion of long-term risks, including quantum computing and post-quantum security, have re-entered the conversation. Notably, quantum-related equities have sold off alongside broader risk assets, making it difficult to reconcile existential threat narratives with market-implied timelines.
Crucially, none of these dynamics point to a failure of the underlying crypto infrastructure. Stablecoin adoption continues to accelerate, institutional tokenization efforts are expanding, and market plumbing has functioned as designed throughout the selloff.
This remains a macro-driven bear market, not a technology-driven one.
What This Setup Suggests for Bitcoin
Taken together, the data paints a consistent picture:
- Historic crash velocity
- Unprecedented distance from long-term trend
- 99th percentile downside moves
- Deep, but non-terminal drawdowns
Source: Short-term return distribution analysis sourced from MarketVector Indexes, via research shared by Martin Leinweber as of 2/5/26. Past performance is no guarantee of future results.
Multiple signals are aligning. Even if this is not the bottom, the evidence increasingly supports the formation of a localized bottom.
Statistically:
- Velocity panic appears exhausted
- Distance from trend is unsustainable
- Mean reversion is probable
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DISCLOSURES
Definitions
Bitcoin (BTC) is a decentralized digital currency without a central bank or single administrator. It can be sent from user to user on the peer-to-peer Bitcoin network without intermediaries.
Ethereum (ETH) is a decentralized, open–source blockchain with smart contract functionality. Ether is the native cryptocurrency of the platform. Amongst cryptocurrencies, Ether is second only to Bitcoin in market capitalization.
Solana (SOL) is ahigh-throughput Layer-1 blockchain; SOL is used for fees and staking to secure the network.
Leverage is using borrowed money or derivatives to increase exposure to an asset. While leverage can amplify gains, it also magnifies losses and can force rapid selling when prices fall.
Deleveraging is the process of reducing leveraged positions, often by closing futures or margin trades. Deleveraging can push prices lower even without new negative news.
Futures Open Interest is the total value of outstanding futures contracts that have not been closed or settled. High open interest signals heavy positioning, while falling open interest indicates positions are being reduced.
Liquidation is the forced closure of a leveraged position when losses exceed required margin. Liquidations can accelerate price moves during sharp selloffs.
Funding Rate is a periodic payment between traders in perpetual futures markets that keeps contract prices aligned with the spot price. Positive funding means longs pay shorts, while negative funding means shorts pay longs.
Rate of Change (ROC) is measure of how fast the price of Bitcoin is moving over a given period. Large ROC values indicate unusually rapid price moves.
Z-Score is a statistical measure that shows how far a value is from its historical average. A higher absolute Z-score means a move is more extreme compared to normal behavior.
Sigma (σ) is another way of expressing standard deviation. It shows how unusual a price move is compared to past price movements. Larger sigma values mean rarer and more extreme events.
200-Day Moving Average is the average Bitcoin price over the past 200 days. It is commonly used to gauge long-term trend direction.
Distance From Trend is how far the current price is above or below a long-term trend measure, such as the 200-day moving average. Extreme distances often occur during periods of market stress.
Drawdown is the percentage decline from a recent peak to a subsequent low. Drawdowns measure the severity of losses during market downturns.
Realized Volatility is a measure of how much an asset’s price has actually fluctuated over a given period. Higher realized volatility means larger and more frequent price swings.
Mean Reversion is the tendency for prices or indicators to move back toward their historical average after extreme deviations.
Oversold is a condition where selling pressure has been intense enough that prices may have fallen faster or further than fundamentals alone would suggest.
Relative Value is an assessment of price based on comparisons to historical levels, trends, or other assets, rather than on absolute price alone.
Capitulation is a phase where investors sell aggressively and indiscriminately, often marking emotional exhaustion and, in some cases, market bottoms.
Risk Considerations
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
The information, valuation scenarios and price targets presented on any digital assets in this blog are not intended as financial advice, a recommendation to buy or sell these digital assets, or any call to action. There may be risks or other factors not accounted for in these scenarios that may impede the performance these digital assets; their actual future performance is unknown, and may differ significantly from any valuation scenarios or projections/forecasts herein. Any projections, forecasts or forward-looking statements included herein are the results of a simulation based on our research, are valid as of the date of this communication and subject to change without notice, and are for illustrative purposes only. Please conduct your own research and draw your own conclusions.
Past performance is not an indication, or guarantee, of future results. Hypothetical or model performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading, and accordingly, may have undercompensated or overcompensated for the impact, if any, of certain market factors such as market disruptions and lack of liquidity. In addition, hypothetical trading does not involve financial risk and no hypothetical trading record can completely account for the impact of financial risk in actual trading (for example, the ability to adhere to a particular trading program in spite of trading losses). Hypothetical or model performance is designed with benefit of hindsight.
Index performance is not representative of fund performance. It is not possible to invest directly in an index.
Investments in digital assets and Web3 companies are highly speculative and involve a high degree of risk. These risks include, but are not limited to: the technology is new and many of its uses may be untested; intense competition; slow adoption rates and the potential for product obsolescence; volatility and limited liquidity, including but not limited to, inability to liquidate a position; loss or destruction of key(s) to access accounts or the blockchain; reliance on digital wallets; reliance on unregulated markets and exchanges; reliance on the internet; cybersecurity risks; and the lack of regulation and the potential for new laws and regulation that may be difficult to predict. Moreover, the extent to which Web3 companies or digital assets utilize blockchain technology may vary, and it is possible that even widespread adoption of blockchain technology may not result in a material increase in the value of such companies or digital assets.
Digital asset prices are highly volatile, and the value of digital assets, and Web3 companies, can rise or fall dramatically and quickly. If their value goes down, there’s no guarantee that it will rise again. As a result, there is a significant risk of loss of your entire principal investment.
Digital assets are not generally backed or supported by any government or central bank and are not covered by FDIC or SIPC insurance. Accounts at digital asset custodians and exchanges are not protected by SPIC and are not FDIC insured. Furthermore, markets and exchanges for digital assets are not regulated with the same controls or customer protections available in traditional equity, option, futures, or foreign exchange investing.
Digital assets include, but are not limited to, cryptocurrencies, tokens, NFTs, assets stored or created using blockchain technology, and other Web3 products.
Web3 companies include but are not limited to, companies that involve the development, innovation, and/or utilization of blockchain, digital assets, or crypto technologies.
All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future performance.
© Van Eck Associates Corporation.
DISCLOSURES
Definitions
Bitcoin (BTC) is a decentralized digital currency without a central bank or single administrator. It can be sent from user to user on the peer-to-peer Bitcoin network without intermediaries.
Ethereum (ETH) is a decentralized, open–source blockchain with smart contract functionality. Ether is the native cryptocurrency of the platform. Amongst cryptocurrencies, Ether is second only to Bitcoin in market capitalization.
Solana (SOL) is ahigh-throughput Layer-1 blockchain; SOL is used for fees and staking to secure the network.
Leverage is using borrowed money or derivatives to increase exposure to an asset. While leverage can amplify gains, it also magnifies losses and can force rapid selling when prices fall.
Deleveraging is the process of reducing leveraged positions, often by closing futures or margin trades. Deleveraging can push prices lower even without new negative news.
Futures Open Interest is the total value of outstanding futures contracts that have not been closed or settled. High open interest signals heavy positioning, while falling open interest indicates positions are being reduced.
Liquidation is the forced closure of a leveraged position when losses exceed required margin. Liquidations can accelerate price moves during sharp selloffs.
Funding Rate is a periodic payment between traders in perpetual futures markets that keeps contract prices aligned with the spot price. Positive funding means longs pay shorts, while negative funding means shorts pay longs.
Rate of Change (ROC) is measure of how fast the price of Bitcoin is moving over a given period. Large ROC values indicate unusually rapid price moves.
Z-Score is a statistical measure that shows how far a value is from its historical average. A higher absolute Z-score means a move is more extreme compared to normal behavior.
Sigma (σ) is another way of expressing standard deviation. It shows how unusual a price move is compared to past price movements. Larger sigma values mean rarer and more extreme events.
200-Day Moving Average is the average Bitcoin price over the past 200 days. It is commonly used to gauge long-term trend direction.
Distance From Trend is how far the current price is above or below a long-term trend measure, such as the 200-day moving average. Extreme distances often occur during periods of market stress.
Drawdown is the percentage decline from a recent peak to a subsequent low. Drawdowns measure the severity of losses during market downturns.
Realized Volatility is a measure of how much an asset’s price has actually fluctuated over a given period. Higher realized volatility means larger and more frequent price swings.
Mean Reversion is the tendency for prices or indicators to move back toward their historical average after extreme deviations.
Oversold is a condition where selling pressure has been intense enough that prices may have fallen faster or further than fundamentals alone would suggest.
Relative Value is an assessment of price based on comparisons to historical levels, trends, or other assets, rather than on absolute price alone.
Capitulation is a phase where investors sell aggressively and indiscriminately, often marking emotional exhaustion and, in some cases, market bottoms.
Risk Considerations
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
The information, valuation scenarios and price targets presented on any digital assets in this blog are not intended as financial advice, a recommendation to buy or sell these digital assets, or any call to action. There may be risks or other factors not accounted for in these scenarios that may impede the performance these digital assets; their actual future performance is unknown, and may differ significantly from any valuation scenarios or projections/forecasts herein. Any projections, forecasts or forward-looking statements included herein are the results of a simulation based on our research, are valid as of the date of this communication and subject to change without notice, and are for illustrative purposes only. Please conduct your own research and draw your own conclusions.
Past performance is not an indication, or guarantee, of future results. Hypothetical or model performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading, and accordingly, may have undercompensated or overcompensated for the impact, if any, of certain market factors such as market disruptions and lack of liquidity. In addition, hypothetical trading does not involve financial risk and no hypothetical trading record can completely account for the impact of financial risk in actual trading (for example, the ability to adhere to a particular trading program in spite of trading losses). Hypothetical or model performance is designed with benefit of hindsight.
Index performance is not representative of fund performance. It is not possible to invest directly in an index.
Investments in digital assets and Web3 companies are highly speculative and involve a high degree of risk. These risks include, but are not limited to: the technology is new and many of its uses may be untested; intense competition; slow adoption rates and the potential for product obsolescence; volatility and limited liquidity, including but not limited to, inability to liquidate a position; loss or destruction of key(s) to access accounts or the blockchain; reliance on digital wallets; reliance on unregulated markets and exchanges; reliance on the internet; cybersecurity risks; and the lack of regulation and the potential for new laws and regulation that may be difficult to predict. Moreover, the extent to which Web3 companies or digital assets utilize blockchain technology may vary, and it is possible that even widespread adoption of blockchain technology may not result in a material increase in the value of such companies or digital assets.
Digital asset prices are highly volatile, and the value of digital assets, and Web3 companies, can rise or fall dramatically and quickly. If their value goes down, there’s no guarantee that it will rise again. As a result, there is a significant risk of loss of your entire principal investment.
Digital assets are not generally backed or supported by any government or central bank and are not covered by FDIC or SIPC insurance. Accounts at digital asset custodians and exchanges are not protected by SPIC and are not FDIC insured. Furthermore, markets and exchanges for digital assets are not regulated with the same controls or customer protections available in traditional equity, option, futures, or foreign exchange investing.
Digital assets include, but are not limited to, cryptocurrencies, tokens, NFTs, assets stored or created using blockchain technology, and other Web3 products.
Web3 companies include but are not limited to, companies that involve the development, innovation, and/or utilization of blockchain, digital assets, or crypto technologies.
All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future performance.
© Van Eck Associates Corporation.