Crypto's $1 Trillion Drain: Flow Analysis of the 2026 Selloff

The market's collapse is staggering in its speed. Since January 14th, the total cryptocurrency market cap has evaporated $1 trillion, shrinking to $2.438 trillion. That works out to a daily drain of $45 billion, a pace that underscores a severe, ongoing liquidity crisis.

Bitcoin, the market's bellwether, has been hit hardest. The price fell to a low of $66,675.12 on Thursday, its weakest level since October 2024, and was last trading at $67,817. This sharp drop is part of a broader wipeout, with the entire crypto market having lost $2 trillion from its early October peak.

The selling has triggered a wave of forced exits. On February 5th alone, the market saw record liquidations of over $125 billion. This massive washout of leveraged positions is a key signal of capitulation, where traders are being forced out of their long bets as prices fall.

Asset-Specific Flow Breakdown

Bitcoin's losses are severe and accelerating. The price has fallen 11% for the week, taking its year-to-date decline to 23%. This sharp drop is part of a broader market selloff, with the entire crypto sector losing 5.9% on February 5th as risk-off sentiment spilled over from metals and tech stocks.

Ethereum shows even steeper negative momentum. The price is trading near $2,111, with key technical indicators confirming a firm downtrend. The four-hour MACD and RSI are signaling only a corrective bounce, while the daily CMF remains firmly negative, showing sustained capital outflows.

The divergence is clear. Bitcoin's weakness is driven by macro factors like a hawkish Fed outlook and tech sector pressure, but Ethereum's technical structure is deteriorating faster. With daily momentum indicators all pointing down, a swift recovery to prior highs looks unlikely in the near term.

Catalysts and What to Watch

The immediate trigger is a loss of risk appetite, with leveraged flows in metals and tech stocks creating clear contagion. Bitcoin fell sharply as risk appetite weakened amid volatility in precious metals and a widespread selloff in technology stocks. This broad-based retreat in equities and commodities has pulled crypto down with it, showing the market's deep integration with other speculative assets.

The key metrics to watch are Bitcoin's daily volume and open interest for signs of capitulation or renewed buying pressure. Volume spiked to over $125 billion on February 5th, a record that signals extreme volatility and forced liquidations. Monitoring whether this volume sustains or reverses will indicate if selling pressure is exhausting itself or building further.

The near-term risk is a cascade of further liquidations if prices break below key support levels seen in late January. The market is vulnerable to a downward spiral where falling prices trigger more margin calls and stop-losses, accelerating the selloff. This dynamic was evident in the record liquidations, and any breach of recent lows could reignite the washout.