Crypto markets moved sharply lower as investor anxiety intensified, sending Bitcoin and Ethereum deeper into the red amid rising liquidations and weakening sentiment across the digital asset market, according to MEXC.
Bitcoin traded near $78,000, while Ether hovered around $2,300, as broader market pressure triggered heavy sell-offs. The decline followed days of growing caution among traders, as fund outflows increased and leverage was flushed from the system. Market data shows liquidation activity accelerating as prices slipped, reinforcing the risk-off mood dominating crypto trading.
Analysts say the latest move reflects a familiar phase in crypto cycles, where fear-driven selling takes hold after prolonged volatility. Social sentiment has also turned decisively negative, with traders increasingly stepping to the sidelines amid uncertainty over near-term price direction.
When fear feels overwhelming, history tells a different story.
Why crypto’s darkest valleys have often preceded its strongest recoveries 👇https://t.co/qrPDkCs7I1
— MEXC (@MEXC_Official) February 4, 2026
Liquidations rise as leverage unwinds
The sell-off has been accompanied by a wave of forced liquidations, particularly among leveraged positions. As prices fell, margin calls cascaded through derivatives markets, amplifying downside pressure. Funding rates have remained relatively stable, suggesting that long-term holders are not exiting en masse, even as speculative positions unwind.
Historically, such periods have marked a reset in market structure, clearing excess leverage and setting the stage for more stable price action. However, traders remain cautious, with short-term volatility elevated and liquidity thinning across major trading venues.
Market focus shifts to fundamentals
With momentum fading, attention is gradually shifting away from short-term speculation toward fundamentals and long-term adoption trends. Previous market cycles show that extreme fear often coincides with quieter accumulation phases, as opportunistic investors begin positioning during periods of low confidence.
Despite the current downturn, Bitcoin fell below the $80,000 support level on Saturday following the confirmation of Kevin Warsh as the next Federal Reserve Chair. Still, analysts warn that recovery may take time, particularly if macroeconomic uncertainty and tightening financial conditions continue to weigh on risk assets.
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