If you’re looking at your bitcoin portfolio and seeing red, chances are you’re witnessing one of the fastest unravellings in crypto history. Bitcoin’s slide has been brutal. After peaking at a euphoric US$126,000 in October 2025, Bitcoin has entered a relentless free fall, touching lows of US$59,000 to US$60,000 in February 2026.
But why is Bitcoin falling? Investors are panic-searching for answers, seeking far and wide. Is this a buy-the-dip moment or the start of a multi-year crypto winter?
In this breakdown of the great Bitcoin Freefall from 2025 to 2026, we cover key events leading to Bitcoin’s latest fall and critical insights from Zhong Yang Chan, Head of Research at CoinGecko, to find out if the worst is over.
A US$19 Billion Washout and the Warsh Paradox
While the recent volatility has captured headlines, the roots of the current dislocation began months earlier.
Back in early October 2025, Bitcoin was trading at an euphoric all-time high of approximately US$126,000. However, when President Trump announced threats of 100% tariffs on Chinese imports in October 2025, it triggered a massive “liquidity shock” across global markets, hitting risk assets simultaneously.
Over a few days, the market witnessed an US$18+ billion crypto sellout through liquidations, which the market has yet to recover from.
“Since then, BTC has slipped from its all-time high of US$126,000 on 6 October 2025 to US$87,000 by 1 Jan 2026,” Zhong shares.
The next leg of the decline came in late February 2026, when President Trump announced the nomination of Kevin Warsh as the next Federal Reserve Chairman. This move signalled a potential regime shift in how Bitcoin is traded, and acted as a second hammer blow.
Analysts have shared with Reuters that having Warsh at the helm could lead to a smaller Fed balance sheet, which poses a risk for assets like cryptocurrencies that thrive on liquidity.
Warsh reportedly has a tendency to favour higher interest rates and inflation concerns. Zhong shares further, saying,
“His (Warsh’s) nomination triggered a simultaneous decline across Gold, Silver, US equities and crypto. BTC’s drastic dip reflects a loss in conviction from sellers, as most of the selling has come from the spot market. But the current rebound could indicate that a floor has been found, and traders are cautiously rebuilding confidence and support for BTC.”
As of 10 February 2026, the bitcoin market is now near US$70,000.
The recent bitcoin rebound has been fuelled by a stabilisation in tech stocks and short covering from traders who had bet on a further collapse, among other factors.
However, the structural damage remains. The question on every investor’s mind is whether this is a genuine recovery or a “dead cat bounce” before the next leg down.
Michael Burry, an investor who’s renowned for betting against America’s housing market during the 2008 financial crisis, has issued a stark warning for miners should it fall below US$50,000.
Burry said that miners will go bankrupt and be forced to sell, and added that tokenised metal futures could collapse into a black hole with no buyers.
While his remarks reflect broader market anxiety, they also underscore how tightly Bitcoin has become linked to liquidity conditions across risk assets.
Digital Asset Treasury Companies Enter a Stress Test
By late January and early February 2026, the damage spread to the equity markets, creating a correlation crisis. The “software-mageddon” saw major AI and software stocks plummet as investors began to question the return on investment for massive capital expenditures in artificial intelligence.
The S&P 500 software and services index shed roughly US$1 trillion in market value, dragging NASDAQ down with it.
Now, as institutional investors hold significant amounts of tech equities and crypto via ETFs, the two asset classes have become glued together. So when hedge funds faced margin calls on their tech portfolios, they sold their most liquid assets to raise cash, and often that asset was Bitcoin.
This correlation meant that as AI stocks crashed, they dragged Bitcoin down in tandem, shattering the narrative that crypto would act as a haven during an equity market correction.
In his commentary, Zhong shares that Digital Asset Treasury Companies (DATCos) are facing an unprecedented test of conviction right now.
Based on CoinGecko’s Crypto Treasuries tracker, most DATCos are currently facing significant paper losses on their crypto holdings, and their share prices now trade below the 1.0 mNAV level, which Zhong explains means that their enterprise value is now below the value of their crypto holdings.
When posed on whether corporate treasury “diamond hands” are being tested in a way that could create risk for BTC, Zhong had more to share.
The good news, he says, is that most of these companies were funded by equity issuances, with only a relatively small debt element. Therefore, there should not be any instances of force-selling to pay down debt.
“However, we are already seeing consolidation happen within the DATCo space (Strive acquiring Semler Scientific), and certain DATCos are already pivoting to other businesses to survive (ETHZilla selling ETH to pivot into aeronautics and tokenization). In the meantime, the two largest DATCos, Strategy and BitMine Immersion, are still regularly acquiring crypto through equity issuances, demonstrating their continued commitment to accumulate more crypto, Zhong shares.
Stablecoins as the Market’s Waiting Room
While Bitcoin has struggled, stablecoins have quietly emerged as one of crypto’s strongest growth stories, with market capitalisations reaching all-time highs and signalling a clear shift in investor behaviour.
Rather than exiting the ecosystem entirely, capital appears to be pausing on-chain, reflecting a deliberate wait-and-see approach amid heightened volatility.
Zhong shares that stablecoins have been a major bright spot for crypto in 2025, especially with the passing of the US GENIUS Act, which created a pathway for the legal issuance of USD stablecoins.
“Since then, we have seen numerous announcements from TradFi players in the US indicating their interest in jumping into the fray to either issue their own stablecoin or integrate stablecoins into their respective businesses. At the same time, crypto has gone multi-asset, with plentiful avenues to trade stocks and commodities on-chain, meaning that investors need not withdraw their capital to switch asset classes.”
He continues, saying that the strong sustained growth in stablecoins reflects not just continued investor interest in the crypto industry, but also the crypto industry’s enlarged scope to keep capital on-chain, as well as the increased and impending adoption of blockchains as payment rails.
While there has been a slight dip of about US$4 billion in total stablecoin market cap in recent days, Zhong shares that they only expect this segment of the market to continue to grow as more issuers jump into the fray and more use cases get built out.
While volatility is likely to persist, the continued conviction of large treasury holders and the steady rise of stablecoins suggest that capital is repositioning.
Whether this marks the end of the downturn or merely an intermission will depend less on sentiment, and more on how global liquidity conditions evolve in the months ahead.
Featured image edited by Fintech New Singapore based on images by tohamina and Dmitry Akreev on Freepik
