$2.2 Trillion Crypto Market Selloff: Bitcoin Could Drop To $40K, Analysts Say

• Crypto's peak valuation has dropped by more than $2.22 trillion, a 52% drop and the second-largest dollar loss in history.
• Bitcoin dropped 4.5% in two hours to about $64,200, wiping out almost $990 million in open interest.
• Bitcoin could hit a low between $55,000 and $58,000, and if corporate selling picks up, it could fall to $40,000, warns Coin Bureau’s co-founder. 

With over $2.22 trillion erased from peak valuations and sentiment plunging into extreme fear, the cryptocurrency market could be experiencing one of its largest declines in history. Analysts warn that U.S. investors may not have seen the bottom yet.

Coin Bureau's data show that the current downturn is one of the worst on record. The ongoing selloff has wiped out about $2.22 trillion from the total crypto market capitalization, a drop of about 52% from the peak. This is the second-largest loss by dollar value in crypto history.

$2.2 Trillion Erased: Second Largest Dollar Loss On Record

"With $2.2 trillion erased from the crypto market, it is now one of the most severe events in its history in US dollar terms,” Nic Puckrin, co-founder of Coin Bureau, told Stocktwits in an email. 

The bear market of 2018 wiped out about $670 billion, or 88% of the market. The downturn that followed the failures of Luna and Three Arrows Capital in 2022 wiped out about $2.28 trillion, or almost 76%.

Bitcoin Oversold – But Analysts Say That’s Not Enough

Puckrin said, “Bitcoin most likely has further to go before it reaches its bear market bottom, despite the RSI sitting below 30, which is the same level we saw in June 2022 after the Luna/3AC unwind,” warning that crypto could be heading for its biggest crash ever, though he acknowledged that “it is something that is difficult to predict at this stage.”

As of writing, Bitcoin (BTC) was trading at $66,146.34, down 3% in the last 24 hours. On Stocktwits, retail sentiment around BTC remained in ‘bearish’ territory, with chatter at ‘low’ levels over the past day.  

Fear Prevails With Nearly $1 Billion Wipe Out

Santiment said Bitcoin dropped 4.5% over 2 hours, bringing its price to about $64,200, its lowest level since early February. Bitcoin's open interest dropped to about $19.5 billion, which is less than half of its 2026 peak of $38.3 billion. 

Santiment's data also showed that the two-hour drop wiped out almost $990 million in total BTC open interest, and negative sentiment hit a two-week high. At the same time, the Crypto Fear & Greed Index dropped to 5, firmly in the "Extreme Fear" range, as market sentiment worsened rapidly.

According to 10x Research's weekly report, volumes are dropping, positioning is getting thinner, and traders are quietly reducing their exposure across the Bitcoin and Ethereum (ETH) markets. “Oversold conditions alone are not enough when liquidity is evaporating, and conviction is fading,” the firm wrote, adding that volatility is currently mispriced. The firm also stated that since Donald Trump took office in January of last year, the crypto market cap has declined by $1.3 trillion, and spot trading volumes on Binance have dropped by 95%. 

Bear Market Not Over Yet

The Glassnode’s data also shows that the seven-day exponential moving average of net realised profit and loss was $1.24 billion per day on February 6, before consolidating to $0.48 billion per day. Class note, said that while the intensity of losses has come down, the broader market continues to be under pressure. 

Puckrin sees Bitcoin’s price likely falling before a bear market bottom is formed. In a statement, he wrote that the current potential bottoming range for Bitcoin is $55,000-$58,000, based on technical indicators. He also added that if corporations continue to dilute their Bitcoin holdings. It could further push prices down to $40,000 before the market fully resets. “Either way, the bear market is not over yet.”

Bitcoin vs Gold 

Some analysts are pointing to bigger problems with the story than just technical and liquidity issues.

Bitcoin seems to have failed its most important macro test, even though it has been called "digital gold" for years. Michaël van de Poppe, a technical analyst, noted that Bitcoin's value is declining relative to gold. He said that the growing gap between the two assets could be a bigger opportunity for Bitcoin. He framed the underperformance as a possible long-term setup instead of just a sign of weakness.

Read also: Whale Pulls 10 Million RAVE As Token Jumps Over 84% In A Week

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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