Bitcoin plummeted nearly 10% to $64,000 as illiquidity and forced selling intensified market volatility, causing record realized losses of $3.2 billion.
Bitcoin’s sharp decline has seen historic losses booked, thin liquidity, and a drop of $10,000 per day, raising concerns that BTC will re-reach $38,000 before stabilizing.
Bitcoin’s recent decline triggered one of the largest loss-taking events in Bitcoin history and shows how quickly market sentiment has changed after months of strong gains. Bitcoin hit its lowest level since late 2024 as the price fell nearly 10% to around $64,000. This sudden movement caused many investors to sell their holdings at a loss.
Recorded losses in 1 day
February 5th stood out as a major stress point for the market. On-chain analyst Murphy reported that realized losses reached approximately $3.2 billion in just one day, the highest single-day total ever. Realized losses reflect the amount investors actually lose when they sell for less than their purchase price, which is a strong indicator of panic selling.
Murphy noted that this one-day loss was even larger than those seen during major crises in the past, such as the Terra-Luna collapse and the FTX bankruptcy. This highlights how deep and sudden the recent decline in stock prices has been.
Low liquidity exacerbated the decline
The Kobeisi letter added that this decline was not caused solely by fear. The weakness in market liquidity was also exposed. Bitcoin’s market depth, or the amount of funds available to absorb large trades, is still more than 30% lower than its October high. With fewer buyers at key price levels, even a moderate sell-off can cause prices to plummet.
The last time market depth was this low was after the FTX collapse in 2022, indicating that the market remains vulnerable during periods of concentrated selling.
There is no clear trigger behind the sale.
Unlike previous crashes that were triggered by big news events, this downturn had no obvious trigger. Murphy said that aside from data adjustment issues in late 2025, the current loss numbers reflect actual selling pressure. He also defended the use of dollar-based loss data, arguing that it better represents the financial and psychological stress investors feel during sharp declines.
extreme price fluctuations
The Kobessi letter also pointed to another first: Bitcoin has fallen by more than $10,000 in a single day. Even during previous high liquidation events, prices had never fallen this much in a single day. This led to speculation that large leveraged traders were forced to exit, potentially accelerating the decline and exposing how risky large positions can be.
How far can Bitcoin fall?
Cryptographer Sherlock highlighted long-term patterns in Bitcoin’s history. As the assets matured, each bear market resulted in smaller losses than the previous one. Bitcoin fell by about 93% in 2011 and by about 77% in 2022. If this trend continues, the current cycle could see a decline of around 70% from its peak of $126,000, indicating a potential bottom near $38,000.
This outlook suggests that while the recent decline has been painful, it may not be the final low and a rapid recovery should not be taken for granted.
