Bitcoin price drops to the mid-$66K range as crypto selloff deepens; market wipes out gains from last year’s rally

Bitcoin slid into the mid-$66,000 range on Thursday as a broad crypto selloff accelerated, erasing the remaining gains from last year’s rally and pulling the wider market further from its 2025 peak. The move has been driven by a mix of risk-off positioning, a firmer U.S. dollar, and a rapid unwind of leveraged trades that had built up during the late-2024 to 2025 run.

By early afternoon, the decline had become a cross-market story: crypto prices fell alongside pressure in high-growth equities, while investors crowded into more defensive positioning.

Where prices stand right now

As of 12:57 p.m. ET on Thursday, Feb. 5, 2026, major tokens were sharply lower on the day, with outsized intraday swings showing how unstable liquidity has become during the unwind.

Bitcoin’s drop put it near its weakest levels since late 2024, while Ether’s slide left it down sharply for the year, reflecting how quickly speculative appetite has faded across the complex.

What’s driving the selloff

The immediate pressure has come from three forces moving at once:

First, the U.S. dollar strengthened, which tends to weigh on dollar-priced risk assets by tightening global financial conditions and reducing marginal demand from non-U.S. buyers.

Second, the market is still digesting a positioning reset after months of heavy inflows and crowded long exposure. When price momentum flips, leveraged traders often sell not because their long-term view changed, but because risk limits and margin requirements force rapid de-risking.

Third, risk appetite has softened broadly, and crypto has traded more like a high-beta growth asset than a defensive hedge. In that environment, liquid, widely held positions can become sources of cash quickly, which can deepen drawdowns.

Why last year’s rally gains vanished

Bitcoin’s late-2024 rally built on expectations that friendlier policy, wider institutional participation, and expanding product access would bring a more stable buyer base. That bid carried into 2025 and helped push prices to record highs in early October 2025.

But the market’s recent slide highlights a core reality: when a rally is driven heavily by flows and momentum, it can reverse faster than the underlying narratives change. As optimism cooled, fewer buyers stepped in to absorb selling, and the decline began to feed on itself—lower prices triggered tighter risk management, which triggered additional selling.

The result is a market that has retraced not only the most recent gains, but also the lingering premium that remained from last year’s post-election surge.

Pressure points: ETFs, leverage, and forced selling

Even in a market with long-term believers, short-term mechanics can dominate.

ETF flows and institutional demand: When large pools of capital reduce exposure, the market feels it quickly—especially when retail demand is not rising enough to offset institutional selling. The psychological impact matters too: ETF outflows can signal waning conviction, which can make discretionary buyers more cautious about stepping in early.

Leverage unwind: Crypto’s futures and perpetual markets can amplify moves in both directions. Once a selloff starts, liquidations can accelerate declines, pushing prices through levels where additional stops and margin calls are clustered. That can produce sudden “air pockets” followed by sharp bounces—volatility that looks chaotic but is often mechanical.

Mining and treasury pressure: Extended drawdowns can strain entities whose balance sheets depend heavily on crypto prices, including some miners and corporate holders with large reserves. Markets tend to watch these players closely during sharp declines, because even the risk of forced selling can weigh on sentiment.

How big the drawdown is in the broader market

The crypto complex has shed an enormous amount of value from its 2025 highs. The total market capitalization peaked in October 2025 and has since fallen by roughly $2 trillion, underscoring that the decline is not limited to one token or one theme.

That scale of decline changes behavior. Traders become more sensitive to headlines, rallies tend to be sold faster, and many participants shift from “buy the dip” to “protect capital,” which can keep rebounds choppy until the market finds a clearer base.

What to watch for the next leg of volatility

The next phase likely depends on whether volatility cools enough to rebuild two-way liquidity.

• Dollar direction and rates expectations: A sustained rise in the dollar can keep pressure on crypto, even if occasional rebounds appear.

• Stabilization above recent lows: Holding a range for more than a few hours—rather than spiking up and down—would be the first signal that forced selling is fading.

• Flow signals: Any sign that outflows are slowing, or that long-term buyers are stepping back in, could support a more durable floor.

For now, the market looks like it is still in the “clean-up” phase of a crowded trade: sharp moves, thin liquidity, and price action driven as much by positioning as by fundamentals.

Sources consulted: Reuters; Associated Press; Financial Times; Bloomberg