Over the past week, Bitcoin briefly fell below $60,000—down more than 50% from its October 2025 peak of $126,000. At the same time, spot trading volume on major exchanges has shrunk by nearly 30% since late 2025.
Behind this phenomenon lies a macro force known as the "AI capital expenditure cycle," which is reshaping global capital flows and triggering a structural liquidity crisis in the cryptocurrency market.
Market Dilemma: From Peak to Halved, Bitcoin Caught in a Liquidity Whirlpool
The cryptocurrency market is undergoing profound change. Bitcoin’s performance in February 2026 epitomizes recent market pressures. Last week, its price plunged nearly 20% in a single day and posted a weekly loss of 8.6%.
Both the speed and magnitude of this decline reached historic extremes. On February 5, Bitcoin’s daily drop registered a Z-score of -6.05σ, indicating a rate of decline rarely seen in history—second only to the COVID-19 crash in 2020.
Looking at a longer timeframe, Bitcoin’s price has now fallen to -2.88σ below its 200-day moving average. This level of deviation hasn’t occurred in the past decade, even surpassing the FTX collapse, signaling that the price has severely diverged from its long-term trend.
Capital Migration: How Is the AI Sector Becoming a "Black Hole" for Liquidity?
The root of the current predicament lies in a massive global capital migration. In recent months, technology stocks and related assets centered around artificial intelligence have been siphoning available funds from markets worldwide.
This "capital absorption" isn’t just a simple sector rotation—it’s a deeper macro mechanism: the AI capital expenditure cycle has shifted from being a liquidity "injector" to a "drainer."
Initially, tech giants funded AI initiatives mostly from their "dry powder" (idle capital), channeling these resources into the real economy and generating a multiplier effect that lifted prices across various risk assets, including cryptocurrencies.
However, as idle capital dries up, every new dollar invested in AI must now be pulled from other assets—such as Bitcoin, tech stocks, or bonds. Capital has become scarce, sparking a "survival of the fittest" for limited funds, with highly speculative assets like Bitcoin bearing the brunt.
Persistent Selling Pressure: US Institutional Sell-Offs and ETF Outflows
As capital flows toward AI, the Bitcoin market also faces ongoing structural selling pressure from the United States. A key indicator is the persistent discount in the Coinbase premium, signaling sustained and strong selling from US market participants.
Internal OTC flow data from market maker Wintermute confirms that, over the past week, US counterparties have been the main sellers in the market. This trend is further amplified by continued net redemptions from US spot Bitcoin ETFs.
Since November 2025, cumulative net outflows from Bitcoin ETFs have exceeded $620 million. Last week alone, Bitcoin ETFs saw net outflows of about $689.2 million. This creates a negative feedback loop: ETF redemptions force issuers to sell Bitcoin on the spot market, putting additional downward pressure on prices.
Leverage and Volatility: "High Volatility and Choppy Trading" as the New Normal in Low Volume
With spot inflows drying up, the market’s price discovery mechanism has become distorted. Low spot trading volume combined with high-leverage derivatives has amplified market volatility.
Data shows that Bitcoin futures open interest has dropped from a peak of over $90 billion in early October 2025 to around $49 billion—a decline of more than 45% in leverage. This rapid deleveraging process itself intensifies price swings.
The market is now in a "high volatility, choppy price discovery phase." Without solid spot buying support, it’s difficult for sustained trends to form in either direction, and prices are more susceptible to large orders and sentiment-driven swings. Last week’s action was described as a "capitulation flush," highlighting this fragility.
Data Insights: Gate Ventures Reveals Structural Market Pressures
Gate Ventures’ latest market review, published on February 9, adds concrete data to this macro picture.
The report confirms that market sentiment has sunk deep into "extreme fear" territory, with the Fear & Greed Index reading just 14. In addition to Bitcoin, Ethereum also came under pressure, falling 7.9% last week with ETF outflows reaching $149.1 million.
Notably, the total crypto market cap—excluding Bitcoin and Ethereum—fell 5.65% last week, slightly less than the overall market decline. This may indicate that, during extreme conditions, some capital is seeking opportunities outside the two leading assets, or that certain altcoins are showing differentiated resilience.
Looking Ahead: What Conditions Are Needed for Market Normalization?
When will the market break out of this high-volatility, trendless state? According to multiple institutions, several key conditions must be met.
The first condition is a cooling of the AI trading frenzy. Microsoft’s recent lackluster earnings report is seen as the beginning of this process, but it’s far from sufficient. Only when the wave of capital chasing AI subsides will liquidity pressures start to ease.
Second, the crypto market itself needs to see a return of spot demand. Three micro signals to watch: the Coinbase premium turning positive, ETF flows shifting from outflows to inflows, and stabilization in futures basis rates. Until these signals emerge, the market is unlikely to see sustained upward momentum.
Finally, clarity in macro policy is crucial. The market is digesting the potential impact of Federal Reserve chair candidate Kevin Warsh’s possible "balance sheet reduction" policy. While conditions for implementation are not mature in the short term, the anticipated policy shift will continue to shape expectations for global liquidity.
Conclusion
As of February 11, Bitcoin’s price on Gate remains locked in a tug-of-war around $67,000. The path to structural recovery will be long, but every bout of extreme volatility may also present new opportunities.
For traders, the priority now is to focus on risk management and position control, patiently waiting for the market to shift from leverage-driven to spot-driven. Until liquidity (the water level in the bathtub) rises again, it will be difficult for asset prices (the rubber duck) to float steadily.
