Bitcoin-Led Selloff Wipes Out Nearly $500 Billion in a Week

Lead

Between Jan. 29 and Feb. 4, 2026, global cryptocurrency valuations plunged by $467.6 billion, driven by a sharp drop in Bitcoin prices. CoinGecko data recorded the decline, which accelerated through the week and sent Bitcoin to its lowest level since early November 2024. The move unfolded as markets digested shifting sentiment after the U.S. political transition and heightened risk-off trading across crypto-linked assets. Updated reporting timestamps: Feb. 4, 2026, 02:25 AM UTC (initial) and 11:07 AM UTC (update).

Key Takeaways

• Total crypto market value fell by $467.6 billion between Jan. 29 and Feb. 4, 2026, per CoinGecko market-data snapshots.
• Bitcoin reached its lowest level since U.S. President Donald Trump’s re-election in early November 2024, marking a multi-month trough.
• The selloff concentrated on major tokens, with broad market caps contracting sharply and trading volumes spiking on liquidation events.
• Derivative markets and leveraged positions likely amplified price moves, as margin calls increased volatility across exchanges.
• Investor sentiment shifted rapidly from risk-seeking to risk-averse, prompting flows out of crypto risk products and into cash equivalents.
• Short-term technical indicators signaled oversold conditions in several major tokens, but on-chain indicators showed ongoing outflows to exchanges.

Background

The crypto rally that began in late 2024 followed renewed optimism after the U.S. election, when markets anticipated friendlier policy and clearer regulatory signals. Bitcoin and other large-cap tokens climbed through year-end as inflows from institutional funds and retail reopened. That backdrop left prices elevated into January 2026, creating sensitivity to any reversal in sentiment or liquidity shock. Historically, similar rapid rallies have invited sharp corrections when concentrated leverage or macro shifts occur.

Market structure in 2026 remains marked by significant trading in derivatives—futures and perpetual swaps—on centralized venues, which can magnify moves when forced deleveraging occurs. On-chain metrics during rallies often show larger transfers to exchanges, a potential precursor for selling pressure. Regulatory watchers and investors alike have said that political developments and policy guidance from major authorities can quickly alter risk appetites. The re-election of President Trump in November 2024 and subsequent signals from parts of the administration about crypto policy contributed to the earlier optimism that preceded this week’s reversal.

Main Event

The selloff accelerated late in the week ending Feb. 4, 2026, as Bitcoin led declines across the market. CoinGecko’s total-market series recorded a $467.6 billion drop from Jan. 29 to Feb. 4, with the largest intraday moves concentrated in Bitcoin and top altcoins. Exchanges reported elevated volatility and higher-than-normal realized volumes, consistent with fast deleveraging among margin traders. Market participants cited a cascade of stop-loss triggers and funding-rate swings on perpetuals as proximate drivers of the sharp price moves.

Bitcoin’s retreat pushed it to levels not seen since early November 2024, retracing much of the post-election gains that had attracted fresh inflows. Spot market liquidity thinned at lower price bands, widening bid-ask spreads and exacerbating slippage for larger orders. The drop was not confined to a single venue or region; trading records show synchronous declines across major global venues, suggesting a market-wide reassessment rather than a localized exchange event.

Macro factors—such as shifting U.S. policy expectations, dollar strength, and volatility in traditional risk assets—contributed to the broader risk-off environment. Some institutional products that had concentrated crypto exposure posted redemptions, further pressuring prices. While short-term technical supports were breached during the rout, on-chain indicators and reserve flows indicated that some long-term holders remained reluctant to liquidate significant holdings immediately.

Analysis & Implications

The immediate implication is a marked re-pricing of crypto risk premia: valuations that had priced in a friendlier regulatory outlook and elevated risk appetite were forced lower once sentiment reversed. A drop of nearly $468 billion in market value compresses leverage and raises the probability of forced selling in the short run, particularly if funding rates remain volatile. That dynamic can prolong downward pressure until liquidity rebuilds and buying interest re-emerges.

For institutional investors, the episode highlights operational and risk-management gaps when markets move rapidly. Funds running concentrated crypto exposure or employing cross-asset leverage may face margin calls that cascade into broader asset sales. Exchanges and custodians will be under scrutiny for how they managed liquidity provision and whether risk controls prevented disorderly unwinds.

Regulatory and policy implications are mixed. A sharp correction can slow adoption narratives tied to price performance, but it also provides a stress-test for market infrastructure and risk frameworks. Policymakers watching systemic links between crypto markets and traditional finance may adjust guidance or supervisory focus depending on observed contagion risks. Internationally, jurisdictions with large crypto activity will monitor cross-border flows and exchange behavior.

Longer term, a re-rating could create buying opportunities for institutions that were waiting on clearer valuations, but that outcome depends on whether fundamental on-chain adoption metrics strengthen after prices stabilize. If the selloff precipitates tighter credit conditions for crypto firms or new enforcement actions, recovery could be slower. Conversely, renewed clarity from regulators or a stabilization in macro risk could restore confidence and halt further outflows.

Comparison & Data

The table above summarizes the headline figures connecting the week’s decline to the broader timeline since the late-2024 political inflection. While the $467.6 billion number reflects aggregated market-cap estimates, individual token valuations and exchange-reported liquidity vary by venue. Comparing this selloff to prior rapid declines shows a similar pattern: concentrated losses in largest-cap tokens, elevated derivatives activity, and compressed liquidity in spot books.

Reactions & Quotes

Market-data providers and business news outlets framed the move around the raw market-cap decline and Bitcoin’s relative position versus its post-election peak. Below are representative, succinct excerpts of public statements and reporting around the event; context before and after each excerpt explains what the comment meant for market participants.

Prior to the data release, analysts highlighted how quickly leveraged positions could reverse gains once sentiment changed, increasing the risk of organized liquidations across platforms.

“Total crypto market value has slumped by $467.6 billion since Jan. 29,”

CoinGecko (market-data provider)

This data point served as the numerical anchor for reporting and trading decisions; traders used the metric to assess scale and speed of the move. CoinGecko’s market-cap series aggregates prices across many venues, so the figure is widely referenced in coverage and by market participants.

Separately, financial news coverage underscored Bitcoin’s decline to a multi-month low and discussed the political backdrop that had supported prior gains.

“Bitcoin tumbled to its lowest level since early November 2024,”

Bloomberg (news report)

That observation linked price action to the timeline of political events and earlier market optimism, offering readers a concise way to contextualize the drop. Together, the quantitative data and narrative reporting shaped trader expectations in the hours following the rout.

Unconfirmed

• Whether a single concentrated exchange or a specific hedge fund triggered the majority of early liquidations is unconfirmed; public data shows broad cross-exchange moves but not a single origin point.
• Any direct link between specific U.S. policy announcements and the timing of the selloff remains unproven; correlation with recent political developments is observed but causation is not established.

Bottom Line

This week’s $467.6 billion drawdown underscores how quickly crypto market valuations can re-price when sentiment shifts and leverage interacts with thinner liquidity. Bitcoin’s retreat to its lowest level since early November 2024 erased a material portion of the post-election gains that underpinned late-2024 inflows. Short-term risks include further forced liquidations and compressed liquidity, while a stabilization would require rebuilt bid depth and clearer signals on policy and institutional flows.

Investors and policymakers should treat this episode as both a market event and an infrastructure stress-test: trading venues, custody providers, and risk teams will be evaluated on how they managed volatility and client protections. For longer-horizon participants, the selloff could present selective entry points if fundamental metrics improve; for short-term traders, the environment remains prone to rapid swings until volatility and funding dynamics normalize.

Sources

• Bloomberg — Bitcoin-led crypto rout erases nearly half a trillion in a week (news report)
• CoinGecko — Market data (market-data provider)