Recent Crypto Market Crash: Full Analysis of the Drop with On-Chain and Off-Chain Reports

Introduction

The recent crypto market crash in early February 2026 is considered one of the most significant price corrections in recent months. During this decline, Bitcoin and major altcoins experienced sharp losses, and billions of dollars in leveraged positions were liquidated. A closer look at the recent crypto market crash shows that it was not caused by a single factor. Instead, a combination of on-chain pressures, global economic developments, volatility in the gold market, and changing investor sentiment triggered the downturn. In this article, we examine all the major causes of the recent crypto market crash from both on-chain and off-chain perspectives.

Main Causes of the Recent Crypto Market Crash

Selling Pressure from Heavy Liquidations

One of the primary drivers of the recent crypto market crash was the massive wave of liquidations in the derivatives market. As Bitcoin broke key support levels, a large number of long positions on major exchanges were forced to close.
Key figures recorded during this period:

• February 5, 2026: Around $1 billion in liquidations within 24 hours

• February 6, 2026: Around $2 to $2.1 billion in liquidations within 24 hours
  In total, approximately $3 to $3.5 billion worth of positions were liquidated across the crypto market within 48 hours. This scale of liquidations intensified selling pressure and created a cascading downward effect on prices.

Capital Outflows from Funds and ETFs

Another major factor behind the recent crypto market crash was capital outflows from Bitcoin investment funds and spot ETFs. Reports indicated that in the days leading up to the decline, inflows into these funds slowed down, and in some sessions, net outflows were recorded.
This had several important effects:

• Reduced institutional demand

• Increased selling pressure in the spot market

• Declining confidence among retail investors

Miner and Long-Term Holder Selling

On-chain data also showed that some miners and long-term investors began selling portions of their holdings.
Reasons behind this selling included:

• Covering operational costs for mining companies

• Profit-taking after months of market growth

• Fear of a deeper correction
  This behavior increased market supply and amplified the downward pressure.

On-Chain Report: Warning Signals Before the Drop

Rising Exchange Reserves

One of the key signals from on-chain data was the increase in Bitcoin flowing into exchanges. This is typically interpreted as a sign that investors are preparing to sell.

Reduced Long-Term Holder Activity

On-chain indicators showed that some long-term holders began moving their coins. This behavior usually appears near market tops and often precedes corrections.

Increase in Large Transactions

The number of high-value transactions on the network increased, indicating whale activity and large capital movements across the market.

Off-Chain Report: Role of Global Economics and Political News

Monetary Policy and Interest Rate Concerns

One of the major off-chain drivers of the recent crypto market crash was growing concern about U.S. monetary policy. Signals from the Federal Reserve suggested that interest rate cuts might be delayed.
This led to:

• A stronger U.S. dollar

• Capital moving out of risk assets

• Investors shifting toward safer investments

Simultaneous Stock Market Decline

The stock market, particularly the technology sector and AI-related companies, also experienced corrections during this period.
The correlation between tech stocks and crypto resulted in:

• Capital outflows from equities

• Selling pressure spilling into crypto

• Increased negative sentiment across markets

The Role of Gold in the Crypto Market Drop

In the days leading up to the crash, gold and silver prices experienced a strong rally. Many investors moved into precious metals as a hedge against uncertainty.
However, after this rapid rise, the gold market also entered a correction phase. This resulted in:

• Some capital leaving the market entirely

• Liquidity staying on the sidelines instead of entering crypto

• Additional pressure on risk-on assets

Timeline of Key Events Leading to the Crypto Market Crash

February 2, 2026

This day marked the first serious signs of weakness in the derivatives market. As Bitcoin approached key support levels, a large number of highly leveraged long positions became vulnerable. The gradual price decline triggered stop-losses and the first wave of liquidations. This caused a sudden increase in selling pressure across exchanges and pushed the market into an unstable phase. At the same time, on-chain indicators showed increased Bitcoin transfers to exchanges, signaling potential selling activity.

February 3, 2026

On this day, the precious metals market experienced sharp volatility. Gold and silver, which had rallied significantly in the previous days, suddenly entered a correction phase. This unexpected move increased uncertainty among investors, as even traditional safe-haven assets showed unstable behavior. As a result, caution grew across financial markets, and some capital exited high-risk assets like stocks and crypto. This shift in sentiment indirectly increased selling pressure in the crypto market.

February 4, 2026

Reports emerged showing increased outflows from Bitcoin investment funds and ETFs. The decline in institutional inflows signaled weakening demand for Bitcoin. Since ETFs had been one of the primary growth drivers in previous months, this shift in capital flows quickly impacted market sentiment. Retail investors also became more cautious after seeing these outflows, leading many to sell part of their holdings and further increase downward pressure.

February 5, 2026

This day marked the peak of selling pressure in the market. Bitcoin broke several key support levels and entered a rapid decline. This triggered a second and much larger wave of liquidations. Within less than 24 hours, over $1 billion worth of leveraged positions were closed across the crypto market. Most of these liquidations came from long positions that had been betting on continued upward momentum. This created a downward spiral: as prices fell, more positions were liquidated, increasing selling pressure.

February 6, 2026

The market was still in shock from the previous day’s drop, and a third wave of liquidations occurred. Selling pressure continued, and more than $2 billion in derivatives positions were liquidated within another 24-hour period. At the same time, the stock market also showed signs of weakness, and investors broadly moved away from risk assets. This alignment of negative factors spread bearish sentiment across global markets and extended the crypto downtrend. The result was one of the largest liquidation waves in recent months.

Key Causes of the Crash in Summary

1. Massive liquidations in the leveraged market

2. Capital outflows from ETFs and funds

3. Selling by miners and long-term holders

4. Concerns over tighter monetary policy

5. Stock market corrections and risk-asset sell-offs

6. High volatility in gold and silver markets

Suggested Images for the Article

• 48-hour liquidation chart
  Alt Text: Crypto market liquidation volume February 2026

• Bitcoin price chart during the crash
  Alt Text: Bitcoin price drop February 2026

• Bitcoin ETF flow chart
  Alt Text: Bitcoin ETF capital outflows

Conclusion

The recent crypto market crash was not driven by a single factor. Instead, it resulted from a combination of heavy liquidations, institutional outflows, miner selling, and macroeconomic concerns. Both on-chain and off-chain data indicate that the market has entered a natural correction phase after a period of growth. In such conditions, proper risk management and avoiding excessive leverage become more important than ever. If you plan to operate in this market, monitoring on-chain metrics and macroeconomic news can provide a clearer perspective for decision-making.

References

• Reuters — Bitcoin crash and liquidation reports (February 2026)

• Bloomberg — $2.1 billion crypto liquidation report (February 6, 2026)

• CoinGlass — Derivatives market liquidation data

• Glassnode — On-chain crypto market reports (February 2026)