Extreme Fear Grips Crypto: Can Bitcoin Turn the $70,750 Rebound into a Floor?

After a historic "absolute dollar drawdown" plunged Bitcoin to $59,000, the digital asset has staged a fragile recovery to reclaim the $70,753.62 threshold

Bitcoin navigated a storm of heightened volatility on Saturday, reclaiming the $69,000 threshold in what analysts characterize as a fragile recovery. While the figure represents a psychological victory for bulls, it comes after a period of intense selling pressure that saw the digital asset plunge earlier this week.

The current rally provides a much-needed breathing room for investors following a bruising mid-week sell-off that challenged the market’s underlying stability. Yet, even as prices trend upward, a sense of trepidation persists among traders. Market participants are closely watching whether the digital currency can cement a definitive support level after weathering one of its most erratic and high-stakes trading cycles of the year.

Bitcoin didn't just drop to $69,000; it actually plunged much lower first. Earlier last week (around February 4–5), Bitcoin suffered one of its largest "absolute dollar drawdowns" in history, falling from much higher levels to nearly $60,000. Bitcoin reached an all-time high of approximately $126,210 in October 2025.

The price bottomed out near $59,000 - $60,000 on Thursday, February 5. As of February 7, the price has "recovered" to the $68,000 – $70,000 range. 

Much of the recent downward pressure stemmed from the nomination of Kevin Warsh as Federal Reserve Chair, which fueled concerns over a return to "inflation hawkishness." Analysts suggest an aggressive monetary tightening cycle under Warsh could continue to dampen the outlook for high-beta assets, leaving market participants cautious despite the weekend’s upward momentum.

For the first time since their high-profile debut in 2025, U.S. spot Bitcoin ETFs—most notably BlackRock’s iShares Bitcoin Trust (IBIT)—have transitioned into net sellers. U.S. spot Bitcoin ETFs saw a two-day withdrawal streak this week totaling over $816 million. BlackRock’s IBIT led the exits with a single-day outflow of $373 million on Wednesday.

This pivot comes as the funds face significant headwinds, recording hundreds of millions of dollars in single-day outflows as institutional appetite appears to waver. Over $130 million in leveraged "long" positions were wiped out in hours during the mid-week crash, accelerating the downward momentum. If Bitcoin holds above $69,000, many see it as a healthy correction; if it stays below, some fear a drop to $50,000.

The recent "devaluation" down to $69,000 has put immense pressure on the market’s biggest players. While Bitcoin has recovered from its mid-week floor of $59,000, the "institutional giants" are handling the volatility in very different ways.

Michael Saylor’s company (MicroStrategy) remains the world’s largest corporate holder of Bitcoin, but this crash has placed them in a rare and uncomfortable position. As of February 1, 2026, MicroStrategy held 713,502 BTC. Their average purchase price is approximately $76,052 per coin. With Bitcoin currently around $69,000, the company is sitting on an unrealized loss of billions of dollars for the first time since 2023.

On February 5, the company reported a staggering $12.6 billion net loss for Q4 2025, driven almost entirely by the "mark-to-market" accounting of their Bitcoin holdings. Despite the 17% drop in the company's stock ($MSTR), Michael Saylor remains unfazed. During the earnings call, he argued that even if Bitcoin's price stayed flat, the company has enough cash reserves ($2.25 billion) to pay dividends and interest for the next 80 years. The company actually increased its holdings in January 2026, buying 41,002 BTC even as the price began to slide.

Analysts like Arthur Hayes (BitMEX co-founder) have pointed out that the crash was worsened by "dealer hedging." When investors sell ETF shares rapidly, selling pressure forces the banks and dealers who manage those products.to sell actual Bitcoin on the open market to balance their books, creating a downward spiral.

Following these liquidations, the Crypto Fear & Greed Index plummeted to a 9/100 (Extreme Fear). This level is usually only seen during major structural failures (like the Terra Luna or FTX crashes), showing that retail investors are currently terrified of another drop.

On Feb 9th, Bloomberg noted that while US tech stocks (like Oracle and Nvidia) staged a massive recovery, Bitcoin did not see the same level of "buying the dip" euphoria. Their data (via Bloomberg Finance L.P.) showed that while Bitcoin ETFs saw a small $350 million inflow on Friday, demand remained "limited" on Monday as the options market showed traders were more interested in "hedging" (protecting against losses) than betting on a new all-time high.

According to Wall Street, Analysts told MarketWatch that "Gold's recovery back above $5,000 threatens to stymie any crypto rebound." As gold hit $5,100, capital seemed to flow toward "old-fashioned" assets rather than the "wave of the future.

The consensus in the Dow Jones reports was that, despite the bounce from $60,000, Bitcoin lacks the "bullish momentum" required to break the current selling pressure.