Bitcoin falls below $71,000 as liquidity tightens and selling accelerates

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Bitcoin extends decline

Highlights

During Asian trading hours, bitcoin fell to around $70,050 amid weakness in global technology stocks and other risk assets.
On-chain and flow data point to declining participation, with CryptoQuant’s Bull Score Index at zero, U.S. spot bitcoin ETFs turning into net sellers, and total liquidations exceeding $654 million over 24 hours.
Analysts remain divided, with some warning of further downside toward around $38,000 due to tight liquidity, while others note that only about 6% of spot Bitcoin ETF assets have been withdrawn so far.

The world’s largest cryptocurrency fell to around $70,050 on February 5, according to TradingView data. The decline coincided with sharp losses in Asian equities, where renewed concerns about artificial intelligence spending, elevated valuations, and slowing earnings momentum pushed investors away from risk assets.

On-chain data signals fading participation

Market weakness is increasingly being framed as structural rather than purely sentiment-driven. CryptoQuant’s latest report shows its Bull Score Index at zero, suggesting Bitcoin is operating with a thinner buyer base and tightening liquidity. Glassnode data similarly points to weak spot volumes and a demand vacuum, with selling pressure not being met by sustained buying.

Bitcoin price movement. Source: TradingView

Institutional flows underline the shift. U.S. spot Bitcoin ETFs have flipped from net accumulation to net selling, creating a year-over-year demand gap measured in tens of thousands of Bitcoin. The Coinbase premium has remained negative since October, signaling muted U.S. spot demand. Stablecoin growth has also stalled, with USDT market cap expansion turning negative for the first time since 2023.

Derivatives markets reflect growing caution. Total crypto liquidations surged above $654 million in 24 hours, with Bitcoin accounting for $272 million, according to CoinGlass. Open interest declined, funding rates turned negative, and demand rose for downside protection through options.

Analysts warn of further downside, patience required

Despite the drawdown, some analysts stress that long-term narratives remain intact.

“It was less than four months ago that Bitcoin hit a new all-time high of $125,000,” said John Haar of Swan Bitcoin. “Nothing has changed the long-term Bitcoin investment thesis.”

Others are more cautious. Georgii Verbitskii of TYMIO said, “One of Bitcoin’s core narratives—that it reliably protects against fiat inflation—is being questioned in the short term.” Stifel has warned Bitcoin could fall as low as $38,000, citing tight liquidity, regulatory gridlock, and ETF outflows, though ETF analyst Eric Balchunas noted that “only 6% of the assets held in Spot Bitcoin ETFs have been withdrawn.”

Why this matters

Bitcoin is increasingly trading like a high-beta risk asset rather than a defensive hedge. On-chain data and ETF flows point to fading participation rather than panic selling. Until liquidity improves and demand returns, analysts warn that volatility and downside risks may persist.

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