Why Bitcoin Fell More Than 10 % in a Week – A Multi‑Factor Breakdown
By [Your Name] – February 10 2026
Bitcoin’s price has been on a roller‑coaster since the start of February. After briefly breaching the $70 000 mark, the leading cryptocurrency is now hovering just below $69 000, down roughly 12 % from its peak a week earlier. The slide was not driven by a single event; a confluence of leveraged trading, hedge‑fund activity, a high‑profile exchange‑traded‑fund (ETF) options trade, and a technical mishap on a Korean exchange all played a part. Below is a synthesis of the key forces that pushed Bitcoin into “extreme fear” territory for retail investors.
1. Massive leveraged liquidations
- Trigger: On 5 Feb, Bitcoin slipped from the low‑$60 000s to the mid‑$60 000s within hours.
- Impact: Coinglass data shows that more than $2 billion in leveraged positions were automatically closed during the plunge, the majority of which were long contracts forced to unwind as prices fell.
- Result: The cascade of forced selling amplified the price drop beyond what fundamentals alone would have justified.
2. Hedge‑fund delta‑hedging and options exposure
- Delta‑hedged strategies: Bitwise portfolio manager Jeff Park pointed to multi‑strategy funds using delta‑hedged positions that were “indiscriminately” liquidated, suggesting a spill‑over from related equity markets.
- Asian hedge‑funds and IBIT options: Parker White (DeFi Development Corp.) linked the crash to a sudden unwind by Hong‑Kong‑based funds that were long call options on BlackRock’s spot Bitcoin ETF (IBIT). Those funds had layered yen‑denominated leverage onto the options trade, added extra exposure after early losses, and were simultaneously hit by adverse currency‑carry costs and a sharp move in silver.
- Volume spike: IBIT saw $10.7 billion of trading on the day of the sell‑off—almost double the previous record—while roughly $900 million in options premiums changed hands.
3. Cross‑asset contagion from precious‑metal markets
- Asian traders with exposure to both Bitcoin and precious metals suffered a double whammy. Silver fell about 20 % on the same day, marking one of its biggest one‑day declines in recent memory. The rapid unwind of the JPY carry trade further strained liquidity for leveraged positions tied to Bitcoin.
4. Accidental “airdrop” on South Korea’s Bithumb exchange
- What happened: Bithumb mistakenly distributed thousands of BTC to user accounts as part of a promotion.
- Market reaction: A flurry of users rushed to sell the erroneously received coins, pushing the Bithumb BTC/KRW price roughly 18 % below the level on other global exchanges for a brief period.
- Regulatory response: South Korea’s Financial Supervisory Service has signalled tighter oversight and harsher penalties for similar operational errors.
5. Institutional sentiment and ETF dynamics
- Although U.S. spot Bitcoin ETFs (such as those from BlackRock and others) have made it easier for large investors to access crypto, recent flows indicate these products are now net sellers, undermining the notion that institutional participation guarantees a bullish bias.
- Analyst Tanisha Katara of Katara Consulting notes that the “digital gold” narrative has lost credibility this cycle, as gold outperformed Bitcoin by a wide margin.
6. Broader macro‑economic backdrop
- Upcoming U.S. inflation data and the delayed Non‑Farm Payrolls report are expected to dominate market focus in the coming days. Capital.com senior analyst Kyle Rodda stresses that fundamentals are acting more as triggers than primary drivers of short‑term price swings.
- Long‑term holders have begun trimming exposure, reflecting doubts about Bitcoin’s hedge‑against‑inflation thesis in the near term.
Key Takeaways
| Factor | How it Contributed to the Crash |
|---|---|
| Leveraged liquidations | $2 bn of long positions were forced to close, accelerating the price drop. |
| Hedge‑fund delta‑hedging | Multi‑strategy funds unwound delta‑hedged bets, adding selling pressure. |
| Asian IBIT options trade | Yen‑denominated leverage and rising funding costs caused a rapid unwind of large call‑option positions. |
| Silver & carry‑trade stress | Simultaneous 20 % drop in silver and JPY carry‑trade unwind strained correlated portfolios. |
| Bithumb airdrop glitch | Erroneous BTC distribution prompted a localized sell‑off that briefly depressed global prices. |
| ETF net‑sell flows | Institutional ETFs moved from net inflows to net outflows, signaling reduced bullish conviction. |
| Retail sentiment | The Crypto Fear & Greed Index remains in “extreme fear,” mirroring November‑level anxiety. |
Outlook
Market participants expect Bitcoin to trade in a relatively tight range between $55 000 and $67 000 for the next few weeks, with the possibility of a deeper decline toward the low $40 000s over the longer term if macro pressures persist. The confluence of leveraged unwinds, cross‑asset contagion, and operational mishaps suggests that volatility will remain elevated until a clear catalyst—be it a decisive macro‑economic data point or a stabilising move from institutional investors—re‑establishes confidence.
For ongoing analysis, stay tuned to our coverage of on‑chain metrics, fund flow data, and regulatory developments across the crypto ecosystem.
Source: https://thedefiant.io/news/markets/why-bitcoin-crashed-over-10-in-one-week
