The cost line of the strategy is breached, and the crypto market faces another "liquidation day."

Written by: Eric, Foresight News

On February 1, 2026, Beijing time, Bitcoin briefly fell below $76,000, breaking the Strategy cost line for the first time in nearly two and a half years, and also the first time since April 12, 2025, that it fell below the $80,000 mark, just a step away from the low of around $74,500 set on April 7, 2025.

According to CoinAnk data, the total liquidation amount of cryptocurrency contracts across the network in the past 24 hours reached nearly $2.2 billion, with over 335,000 investors being wiped out, marking the highest single-day liquidation amount since "10·11". Among them, Ethereum saw liquidations of about $961 million, Bitcoin $679 million, and SOL $168 million.

Several high-profile whales were also not spared. "Brother Maji" Huang Licheng's position was completely liquidated on the evening of January 31; the address starting with 0x9ee, known as "CZ's counterpart," was liquidated for over $60 million, losing all profits and incurring a loss of over $10 million; the so-called "insider big shot" who shorted after the flash crash on October 11 was also liquidated for over $200 million, going from a profit of $142 million to liquidation in just 56 days.

At the same time, as Ethereum briefly fell to $2,240, Trend Research, under Yi Lihua, faced a maximum unrealized loss of nearly $500 million on its holding of 651,300 Ethereum. Trend Research currently has 175,800 WETH collateralized on Aave, borrowing about 274 million USDT, with a loan health ratio of 1.29 and a liquidation price of $1,558. Although the liquidation price is still some distance from the current price, if the market's downturn continues, $1,500 is not out of reach.

Recent fluctuations in the financial markets have been extremely severe. Based on closing prices, spot gold and silver fell by more than 10% and 26%, respectively, on the last trading day of the week, marking a significant decline not seen in decades. Microsoft alone saw its market value evaporate by over $350 billion due to a 1% quarter-over-quarter decline in Azure growth. These exaggerated figures indicate that capital has become highly concentrated in a few targets, and everyone is on edge, where even a slight crack could trigger a stampede out of the market.

Geopolitical Risks Intensify, U.S. Government Faces Shutdown Again

According to Xinhua News Agency, on the evening of January 31, Beijing time, an explosion occurred in a residential building at the port of Bandar Abbas, Iran. The instability of the critical oil hub in the Strait of Hormuz, which handles about 20% of global maritime oil, combined with escalating U.S.-Iran conflicts, has further heightened market concerns about the situation in the Middle East. The risk aversion to the international situation may just be an inducement; Punchbowl News founder tweeted around 4 a.m. today that House Democrats have informed House Republican leadership that they will not assist Republicans in passing funding proposals under the current funding pause. This suggests that what was initially thought to be a government shutdown lasting only a few days could evolve into a second prolonged shutdown within months.

Although the timing of this news release was later than the start of the decline, various uncertainties triggered panic, compounded by thin weekend liquidity, making it easy for a series of liquidations to occur without large-scale sell-offs. Abraxas Capital's Heka fund transferred 2,038 Bitcoins to Kraken last night.

Regulatory Bills Weaken Confidence, Bitcoin's Status Questioned

Since "10·11," the performance of the cryptocurrency market has gradually lagged behind that of stocks, precious metals, and commodities. In addition to a significant reduction in liquidity, the newly proposed crypto market structure bill, which treats crypto assets with the same regulatory intensity as securities, may also be one of the "culprits." The previous boom in cryptocurrencies largely benefited from a relaxed regulatory environment, and the development of stablecoins and RWA tokenization has begun to integrate into the mainstream, but the survival of "crypto native" entities has unexpectedly faced suppression. The gap between ideals and reality has led to a backlash against previous excessive optimism.

On January 29, Beijing time, the U.S. Securities and Exchange Commission (SEC) released new regulatory guidelines, clarifying that tokenized stocks are subject to the same regulatory rules as ordinary stocks, effectively sentencing the expectation of "light regulation" for tokenization to death.

In addition, the recent divergence in the performance of risk assets and safe-haven assets has raised questions about Bitcoin's own attributes. For a considerable period, Bitcoin always followed the trends of tech stocks or gold, but since October, Bitcoin has neither kept up with the rising U.S. stocks and silver driven by AI nor with gold, which surged due to geopolitical risks. Clearly, whether one is optimistic about AI development or seeking safe havens, there are better options in the market than Bitcoin.

The continuous net outflow of nearly $3 billion from spot ETFs over the past two weeks also corroborates this point. Last weekend, both U.S. stocks and gold and silver experienced significant declines, but funds did not flow into the cryptocurrency market, indicating that market interest in cryptocurrencies has already waned.

2026 is an extreme test of the resilience of the crypto market. While we do not wish for the industry to face another blow, we believe most people would agree with the view that a major reshuffle is not a bad thing for the current crypto industry.