Bitcoin Continues to Plunge in Value Months After Record Crash

Bitcoin fell to $78,000 on 2026-02-05, continuing its decline from record highs earlier in 2025. The price has struggled to hold above key support levels amid ongoing macroeconomic uncertainty and weaker demand from institutional investors. Recent volatility has been amplified by geopolitical tensions and the nomination of Kevin Warsh as the next Federal Reserve chair.

U.S. spot Bitcoin exchange-traded funds (ETFs) have seen consistent outflows, further pressuring the asset. On February 4, ETFs linked to Bitcoin recorded $545 million in net outflows, with BlackRock's iShares Bitcoin Trust (IBIT) accounting for $373 million of that total. This trend has continued a pattern of reduced institutional exposure, with year-to-date redemptions now reaching nearly $1.3 billion.

Bitcoin's price weakness has coincided with weak demand in the broader ETF space. Ethereum and XRP ETFs also saw outflows, while only a few altcoin-linked funds recorded inflows. These trends suggest a broader repositioning by investors, who are selectively reallocating capital within the crypto sector rather than entirely exiting.

Why Is Bitcoin's Price Still Falling?

Bitcoin has failed to recover above the $80,000 level, a key psychological and technical threshold. On-chain analytics firm Glassnode highlighted a short gamma pocket at around $80,000, indicating increased risk of further downward movement should the price break into that zone. The platform also noted sustained sell-side pressure from long-term holders and miners, who have been offloading BTC on exchanges.

The recent volatility has been exacerbated by macroeconomic factors. The nomination of Kevin Warsh, a known inflation hawk, as the next Federal Reserve chair has raised concerns about tighter monetary policy. Analysts have warned that this could lead to reduced liquidity in both traditional and crypto markets.

How Are ETFs and Institutional Investors Responding?

Bitcoin ETFs have been a major source of liquidity in recent months. However, outflows have now exceeded $1.6 billion since the start of 2026, according to data from multiple sources. This has reduced a key support mechanism for the price, with ETF inflows previously serving as a buffer against market volatility.

Some analysts believe that most ETF investors remain committed to the long-term potential of Bitcoin and may not respond to short-term price swings. Nate Geraci, an ETF analyst, noted that the vast majority of ETF assets are likely to stay in place unless there is a major shift in investor sentiment.

Despite the outflows, Bitcoin ETFs have shown signs of stabilization. On February 3, ETFs saw a return of inflows, with nearly $562 million added to U.S.-listed products. This marked a reversal of a four-day outflow trend and may signal renewed interest from institutional investors.

What Are Analysts Watching Next?

Market participants are closely monitoring key support and resistance levels. The $70,000 level is considered critical, as a sustained break below this level could trigger further technical selling. Polymarket participants currently assign a 71% probability that Bitcoin will fall below $65,000 by year-end.

Derivatives traders have also adopted a defensive stance. The open interest weighted funding rate for Bitcoin remains negative, indicating continued bearish sentiment among leveraged traders. A shift to positive territory could signal a potential short-covering rally.

Investors are also watching for policy developments and geopolitical outcomes that could influence market risk appetite. Recent tensions in the Middle East and potential U.S. military actions have added to global uncertainty. Diplomatic efforts between the U.S. and Iran remain uncertain, with no clear resolution in sight.

Information Services Corporation (ISC), a publicly traded company, recently released 2026 guidance for its operations. While not directly linked to Bitcoin, the company's strategic review and financial outlook provide a broader perspective on market dynamics. ISC has outlined revenue growth targets and is pursuing a range of strategic options to maximize shareholder value.

Overall, the market remains cautious as Bitcoin's technical indicators show extended bearish momentum. The Relative Strength Index (RSI) has fallen into oversold territory, but this does not necessarily indicate an immediate reversal. A sustained close above $80,000 would be needed to rebuild confidence among traders and investors.