Crypto Market Faces Sharp Downturn Amid $1.7B Liquidations

The crypto market encountered a sharp drop on February 6, 2026, with global liquidations reaching $1.7 billion. Bitcoin (BTC) fell below the $65,000 mark, and Ethereum (ETH) decreased to $1,890.

Leading causes include an Asian entity unwinding leveraged trades on Binance. Franklin Bi of Pantera Capital indicated the sell-off was exacerbated by yen carry trades and failed commodities recovery attempts.

Franklin Bi, General Partner at Pantera Capital, attributed the sell-off to a major Asian non-crypto entity unwinding leveraged trades on Binance, yen carry trades, and failed gold/silver recovery attempts, leading to forced liquidation.

Bitcoin experienced a 9.67% decline, while Ethereum suffered a 9.91% drop, impacting investors and traders significantly. The event shows the market’s volatility and the risk in leveraged positions during downturns.

The U.S. Treasury Secretary Scott Bessent reported that the government retains over $15 billion in seized BTC but lacks authority to intervene in market fluctuations.

White House discusses crypto market structure amid the recent downturn, engaging with banks and crypto groups regarding stablecoin regulations.

Institutional players, like Bitmine, face unrealized losses amidst the downturn. Ethereum treasury’s Tom Lee remarked on these losses, viewing them as part of the broader strategy to outperform the market over time.

Tom Lee, Chairman of Ethereum treasury firm Bitmine (BMNR), addressed $6.6B unrealized ETH losses, stating, ‘these remarks miss the point of an Ethereum treasury.’ He pointed out that Bitmine aims to track the ETH price and outperform the market over the cycle; unrealized losses on ETH holdings during a crypto market downturn are ‘a feature, not a bug,’ just  JST +0.20% as index ETFs incur losses when the market falls.

Potential regulatory outcomes could involve probing possible sanctions evasion via exchanges.