BTC USD crash explained: Experts reveal top reasons why crypto market tumbled yesterday and why analysts are starting to buy spot Bitcoin now

Bitcoin crash explained: Bitcoin’s latest plunge doesn’t have a single villain behind it. There was no sudden exchange collapse, no regulatory bombshell, and no dramatic overnight ban. Instead, the market has been worn down by pressure coming from several directions at once.

Why this Bitcoin (BTC USD) crash looks different from past selloffs

Matthew Sigel, head of digital asset research at VanEck, outlined the top forces that collectively dragged Bitcoin down to around $60,000 on Thursday, as per a DL News report.

In previous downturns, the trigger was obvious. FTX collapsed. China banned mining. Terra imploded. This time, there’s no single shock event. That makes calling a definitive bottom more difficult, but it also means the market isn’t dealing with a sudden structural failure.

Massive leverage unwind hits Bitcoin price (BTC USD)

One of the biggest pressures has been the rapid unwind of leverage. Bitcoin futures open interest has fallen sharply, sliding to about $49 billion from roughly $61 billion just a week earlier, according to Coinglass. That’s more than a 20% drop in leveraged exposure in a very short time.

Zoom out further, and the shift looks even more dramatic. Futures open interest peaked above $90 billion in early October. Since then, more than 45% of that leverage has been flushed out of the system. Bitcoin’s price has fallen by a similar percentage, suggesting leverage and price have come down together rather than triggering a chaotic cascade of forced selling.

Also read: BTC USD price: Bitcoin reclaims $70,000 level after brutal crash since FTX collapse in 2022 - here' what's happening in the crypto market today

BTC USD liquidations surge as traders pull back

Liquidations have still been heavy. Over the past week, total crypto liquidations reached an estimated $3 to $4 billion, with roughly $2 to $2.5 billion tied to Bitcoin futures alone.

AI hype cools, putting pressure on Bitcoin miners

At the same time, enthusiasm around artificial intelligence has started to cool. Sigel noted that investors are increasingly questioning whether massive AI infrastructure spending will actually generate meaningful returns. Monetisation remains unclear, and that uncertainty has begun to ripple outward.

Bitcoin miners have been hit especially hard. Many mining firms had pivoted toward AI and high-performance computing, hoping to repurpose facilities and ride the AI boom. But as financing conditions tightened and Bitcoin prices weakened, miners were forced to sell Bitcoin to raise cash and shore up balance sheets, adding extra supply to an already fragile market.

According to Sigel, the timing couldn’t be worse. Miners are selling Bitcoin to fund AI ambitions just as confidence in those AI bets starts to wobble.

Also read: MSTR stock rallies 23% today despite Strategy's $12.4 billion net loss as Bitcoin (BTC USD) rebounds to $70,000 – analysts' stock price target revealed

Governance concerns resurface amid World Liberty Finance deal

Governance concerns have also resurfaced. The Trump family’s World Liberty Finance project raised fresh transparency questions after it sold a large stake to UAE-linked investors. A Wall Street Journal report on January 31 revealed that nearly half of the project was sold for an undisclosed $500 million to a member of the Abu Dhabi royal family around the time Donald Trump took office in January 2025.

Sigel pointed out the irony that these are precisely the kinds of disclosure issues the Clarity Act aims to address, suggesting uncertainty like this can weigh on broader market confidence.

Quantum computing fears add another layer of uncertainty

Another source of unease has been the renewed focus on quantum computing risks. Discussion around the topic has intensified across developer and community forums, even as several Bitcoin Core developers continue to downplay how immediate the threat really is.

Quantum computers could theoretically break Bitcoin’s encryption model, and a Chaincode Labs report estimated that anywhere between 20% and 50% of circulating coins could be vulnerable. Adding to the irony, stocks tied to quantum computing have fallen sharply alongside Bitcoin and other risk assets.

Bitcoin four-year cycle still shapes investor psychology

Investor psychology tied to Bitcoin’s four-year cycle has also played a role. Historically, Bitcoin’s halving reduces new supply, prices rise, profits get taken, and a bear market follows. That narrative remains deeply ingrained, even as many observers have argued that the cycle may no longer apply.

Sigel stressed that past cycles were rarely clean or linear. After major drops, there were often multiple rebounds that proved strong enough to support meaningful counter-trend rallies.

Analysts see opportunity despite Bitcoin drawdown

Despite the list of negative forces, Sigel believes the current reset has created opportunity. He said, “The depth of the drawdown and the degree of leverage reset have made the current price washout increasingly attractive for building positions on a one- to two-year view,” adding, “I’ve been adding to spot Bitcoin today,” as quoted by DL News.

Crypto crash reasons explained

Bitwise CIO Matt Hougan echoed the idea that there’s rarely a single explanation for crypto downturns, as per The Block report. He said the latest slide has been driven mainly by long-term investors selling ahead of the historically observed four-year cycle, combined with leverage liquidations and a broader shift toward risk-off assets.

Hougan estimated that long-term holders sold well over $100 billion worth of Bitcoin last year as fears grew that the cycle would repeat earlier post-peak drawdowns. That increase in supply arrived just as speculative demand faded, with capital rotating toward AI-linked equities and, more recently, precious metals.

Why this Bitcoin downturn isn’t like 2022

This time, however, Hougan argues the backdrop is different from 2022. While Bitcoin has fallen alongside other risk assets, including equities, gold, and silver, there are no signs of insolvency-driven forced selling or broken market infrastructure.

With sentiment near levels seen at the 2018 and 2022 bottoms, Hougan believes much of the bad news may already be reflected in prices, even if further downside remains possible.

Crypto bear markets, he said, tend to end in exhaustion rather than excitement.

Bloomberg ETF analyst Eric Balchunas reinforced the long-term perspective, noting that sharp drawdowns have historically failed to derail Bitcoin’s broader trajectory, as per The Block report. While he acknowledged that this time could be different, he pointed out that both stocks and Bitcoin have always recovered from past beatdowns to reach new highs.

Bitcoin price rebounds after touching $60,000

After touching lows near $60,000, Bitcoin has rebounded and reclaimed $70,000, rising almost 4% on the day.

FAQs

Why are Bitcoin miners selling BTC?
Miners sold Bitcoin to raise cash as financing tightened and prices fell, especially after pivoting toward AI projects.

Does the four-year Bitcoin cycle still matter?
Many investors still trade around it, even as some argue it may no longer fully apply.