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Bitcoin can’t catch a break. The world’s biggest cryptocurrency fell back below key levels Monday after briefly poking above $78,000 over the weekend, and Galaxy Digital’s Alex Thorn dropped some pretty grim analysis about what’s coming next.
Late January was brutal for Bitcoin holders. The digital asset got hammered with a nasty 15% drop between January 28 and 31, then things got even worse heading into the weekend. A single day saw Bitcoin crater 10%, which triggered over $2 billion in long-position liquidations across futures markets. Traders who bet on higher prices got absolutely crushed. The sell-off was so intense that it wiped out months of gains in just a few trading sessions.
BTC hit $75,644 on Coinbase at its worst point.
That’s below the average cost basis of major US spot Bitcoin ETFs, which sits around $84,000 according to industry estimates. Bitcoin also traded near MicroStrategy’s average cost basis of $76,037 and got dangerously close to its one-year low of $74,420 from April 2025’s “Tariff Tantrum.” For context, MicroStrategy holds over 400,000 Bitcoin on its balance sheet, making it one of the largest corporate holders of the cryptocurrency.
Thorn’s analysis revealed some pretty concerning numbers. He said 46% of Bitcoin’s supply is now underwater, meaning those coins were last moved at higher prices than today’s levels. January marked the fourth straight month of declines for Bitcoin – something we haven’t seen since the brutal bear market of 2018. And here’s the kicker: historically, when Bitcoin drops 40% from a peak without hitting a 50% decline, it usually keeps falling. That points to a potential target near $63,000, which would represent another significant leg down from current levels.
The data gets worse.
There’s basically a demand vacuum between $82,000 and $70,000, meaning there’s not much buying interest in that range. Realized price sits near $56,000, while the 200-week moving average hovers around $58,000. Those levels have provided strong support in the past, but only if Bitcoin can stay above them. Break below, and things could get really ugly fast.
Thorn didn’t see much accumulation happening from whales or long-term holders either. Some profit-taking has slowed down, but that’s not really bullish – it’s more like sellers taking a breather. External catalysts are pretty much nowhere to be found right now. Bitcoin’s failure to rally during recent geopolitical tensions, when gold and other safe havens moved higher, shows just how disconnected it’s become from traditional market dynamics.
US legislation like the CLARITY Act might help eventually. But that’s not likely to pass anytime soon.
Doctor Profit, another crypto analyst who’s been tracking Bitcoin cycles for years, just revised his outlook lower. He now thinks Bitcoin’s cycle bottom could hit $44,000, down from his previous forecast range of $50,000 to $60,000. That’s a pretty significant adjustment and shows how quickly sentiment can shift in crypto markets.
February 2026 brought more of the same cautious trading. Bitcoin tried to push past $80,000 on February 2 but got smacked down hard by sellers. The lack of buying momentum above key resistance levels has made it tough for bulls to gain any traction. Galaxy Digital keeps warning that without clear catalysts, market dynamics will stay unpredictable and probably bearish.
Interestingly, some altcoins have actually held up better than Bitcoin during this selloff. That divergence has got portfolio managers rethinking their crypto allocations and wondering if Bitcoin dominance might be peaking. The broader crypto ecosystem continues evolving even as Bitcoin struggles.
Alex Thorn said on February 3 that institutional buying interest remains basically nonexistent. Without major players stepping in with fresh capital, Bitcoin’s recovery path looks pretty rocky. The market’s waiting for something – anything – that might change the current trajectory, but so far there’s not much on the horizon.
The Fed’s interest rate decision on February 4 could shake things up. Galaxy Digital thinks any surprise rate hikes would probably hurt high-risk assets like crypto even more. Meanwhile, Glassnode data shows Bitcoin exchange inflows keep rising – over 5,000 BTC flowed into exchanges on February 2 alone. That’s usually a bearish sign since it means more people are getting ready to sell.
Cathie Wood’s ARK Invest keeps buying Bitcoin for their fund despite the carnage. They still think long-term prospects look good, but even the most bullish investors admit current conditions are pretty challenging.
The technical picture shows Bitcoin trapped in a descending channel pattern since its peak, with each bounce getting weaker than the last. On-chain metrics reveal that short-term holder supply in profit has collapsed to just 12%, while mining difficulty adjustments haven’t provided the usual relief valve for price pressure.
Major crypto lending platforms like Genesis and BlockFi saw increased withdrawal requests during the selloff, adding another layer of selling pressure. Coinbase’s premium to other exchanges turned negative for the first time since October, indicating US institutional demand has completely dried up.
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