Bitcoin Plunges Then Rebounds Amid Unprecedented Volatility

Bitcoin, the world's largest and most closely watched cryptocurrency, has endured a week of whiplash-inducing volatility, leaving investors, companies, and policymakers scrambling to make sense of a rapidly shifting landscape. On Thursday, February 5, 2026, Bitcoin’s price plunged more than 12%, falling below $64,000—a level not seen since October 2024—according to reporting by Coinbase and CoinMarketCap. The drop marked the steepest crypto market meltdown since the collapse of Sam Bankman-Fried’s FTX exchange over three years ago, as noted by CNBC. At its lowest point, Bitcoin’s value dipped to $67,000, representing an 11% daily slide and a staggering 46% decline since its record high of $126,210.50 just four months ago.

The carnage was not limited to Bitcoin holders. The ripple effect swept across the broader crypto ecosystem, hammering companies whose fortunes are tied to digital assets. Shares of Coinbase Global, the prominent U.S. crypto exchange, tumbled 9.1%, while Robinhood Markets, the popular trading platform, lost 8.1%. Bitcoin mining giant Riot Platforms dropped 10%. Strategy, formerly known as MicroStrategy and the largest corporate holder of Bitcoin, saw its shares plunge 17% on Thursday. According to its filings, Strategy holds 713,502 Bitcoins, purchased at an average price above $76,000. With Bitcoin trading well below that mark, the company now finds itself underwater, its holdings worth about $47.8 billion—less than the $54.3 billion it paid.

The pain extended to other high-profile crypto ventures. American Bitcoin, a company in which Eric Trump and Donald Trump Jr. hold stakes, fell 6.6% and is now down over 80% since October 2025. The World Liberty Financial token ($WLFI) saw its market value plummet from over $6 billion in mid-September 2025 to just $3.25 billion. Even meme coins tied to political figures weren’t spared: the $TRUMP coin, named for President Donald Trump, now trades at $3.93, a far cry from its $45 price tag before Trump’s inauguration in January 2025.

What’s behind this dramatic reversal? The answer, according to CNBC and The Wall Street Journal, lies in a confluence of factors that have shaken investor confidence in riskier assets. For much of the past year, Bitcoin was buoyed by expectations of a more crypto-friendly administration following Trump’s election in November 2024. But as 2026 dawned, sentiment soured. Investors began rotating out of speculative assets like cryptocurrencies and tech stocks, seeking shelter in traditional safe havens such as gold, Treasury bonds, and foreign equities. The shift has been stark: since February 2025, Bitcoin’s value has dropped 35%, while gold has surged nearly 70%. So far in 2026, gold is up more than 11%, while Bitcoin is down over 26%.

Analysts at Citi pointed to a drying up of money flowing into Bitcoin exchange traded funds (ETFs), which had fueled much of the cryptocurrency’s ascent last year. With Bitcoin’s price now below the average entry point for many U.S. spot Bitcoin ETF investors—estimated at about $81,600—concerns have mounted about further downside. Michael Burry, the investor famed for shorting the housing market before the 2008 financial crisis, warned in a Substack post that Bitcoin’s sell-off could spiral into a “death spiral.” As he put it, “Sickening scenarios have now come within reach.”

The market’s nerves have also been rattled by developments in Washington. President Trump’s nomination of former Federal Reserve governor Kevin Warsh as his pick for Fed chair has injected fresh uncertainty. While Trump has insisted on a Fed chair who supports lower interest rates, Warsh is widely seen as an inflation hawk, less likely to cut rates aggressively. As Bloomberg reports, this has raised fears that higher rates and tighter capital conditions could sap the appetite for high-risk bets like crypto.

Further complicating matters, Treasury Secretary Scott Bessent dashed hopes of a government rescue for crypto markets. Speaking in Washington, Bessent stated that the U.S. government does not have the power to intervene and support cryptocurrencies in the event of a crash, despite the administration’s generally positive stance toward the sector. Meanwhile, progress on crypto legislation in Congress has been slow and piecemeal. While lawmakers have advanced some measures to clarify the regulation of digital assets and stablecoins, broader rules on market structure—seen as crucial for bringing certainty to the sector—remain stalled. As Citi’s analysts wrote, “Although there has been progress on crypto legislation, the pace has been slow and uneven.”

Despite the gloom, Friday brought a dramatic twist. Bitcoin staged a forceful rebound, surging as much as 11.4% to $70,300, according to CNBC. Earlier in the session, it had come perilously close to breaking below the $60,000 threshold for the first time since October 2024. By 11:59 a.m. ET, Bitcoin was trading at $69,594.15, up 10% on the day. The rebound was mirrored in equity markets, with the Dow Jones Industrial Average jumping 918 points (1.9%), the S&P 500 adding 1.4%, and the Nasdaq Composite climbing 1.5%. BigTech stocks like Nvidia and Microsoft also bounced back, rising 6% and 1%, respectively, after suffering near double-digit percentage declines earlier in the week. The rotation back into risk-on assets suggests that, at least for now, some investors are ready to bet that the worst is over.

Yet, not everyone is convinced that the pain is behind us. Bitcoin remains about 45% off its all-time high, and some analysts caution that the recent bounce may be short-lived. Thielen of 10X Research estimates that Bitcoin could fall as low as $50,000 after a brief counter-trend rally. “I think we are going to have a little counter-trend rally that might go sideways or bounce a little bit,” Thielen told CNBC. “But I think during the summer we make another low.”

The volatility has reignited debate over Bitcoin’s status as “digital gold.” While the cryptocurrency has long been pitched as a store of value in uncertain times, its recent performance has diverged sharply from that of physical gold. As investors seek stability, many are opting for tried-and-true assets, leaving Bitcoin and other digital currencies exposed to further wild swings.

Even as the White House continues to signal support for crypto innovation, the sector’s future remains clouded by regulatory uncertainty and shifting investor sentiment. “Even if regulatory clarity is passed, many investors may still be cautious about putting money into such a volatile asset class,” wrote Louis Navellier, an investment manager and market strategist at Navellier & Associates, on Wednesday.

For now, Bitcoin’s rollercoaster ride serves as a stark reminder of the risks—and occasional rewards—of betting big on digital assets. Investors, companies, and policymakers alike are left watching the charts, wondering what the next twist might bring.