The crypto market is facing its darkest week in years as a Bitcoin price crash in 2026 has sent digital assets spiraling downward. Bitcoin plummeted to the $60,000 mark on February 6, erasing nearly half of its value since the October 2025 peak. The collapse was punctuated by MicroStrategy reporting a staggering $12.4 billion quarterly loss, triggering panic across institutional and retail sectors alike. As the dust settles, the industry is grappling with over $2.5 billion in crypto market liquidations and a sentiment of extreme fear not seen since the Terra collapse.

MicroStrategy’s $12 Billion Loss Shakes Institutional Confidence

On Thursday, February 5, MicroStrategy (MSTR) delivered a financial shockwave that intensified the ongoing sell-off. The company, the largest corporate holder of Bitcoin, reported a massive Q4 2025 operating loss of $12.4 billion. This deficit was driven almost entirely by impairment charges on its vast Bitcoin holdings, which have lost significant value as prices tumbled from their $126,000 highs.

Michael Saylor, the company's Executive Chairman, took to social media and earnings calls to reassure investors, urging them not to panic and to stick to the "HODL" strategy. Despite his confidence, Wall Street reacted swiftly; MSTR stock plunged over 17%, hitting a two-year low. The MicroStrategy 12 billion loss has tested the "don't sell" thesis that many institutional players rely on, raising questions about how long public companies can stomach such volatility without liquidating assets.

Market Carnage: $2.5 Billion in Liquidations and Extreme Fear

The price action this week has been nothing short of catastrophic for leveraged traders. Data from Coinglass confirms that more than $2.5 billion in positions were wiped out in a series of cascading liquidations starting February 1 and accelerating through February 6. Long positions accounted for the vast majority of these losses as Bitcoin's worst daily drop in over a year caught bulls off guard.

This rapid devaluation has crushed market sentiment. The Crypto Fear and Greed Index has plummeted to a score of 5—indicating "Extreme Fear." This single-digit reading is the lowest recorded since the dark days of 2022, signaling total capitulation among retail investors. Analysts point to a "perfect storm" of rising treasury yields and a tech stock sell-off as the primary catalysts, with one expert noting that the "bill is coming due" for risk assets that rallied too hard in late 2025.

Miners Unplug as Profitability Vanishes

A critical, underreported factor in this crash is Bitcoin mining capitulation. With Bitcoin trading near $60,000, the economics of mining have turned upside down. Recent data indicates that the average cost to produce one Bitcoin has risen to approximately $87,000, meaning miners are losing roughly $27,000 for every coin they mine.

This unprofitability is forcing major operators to unplug rigs to stem losses, leading to a drop in the network's hashrate. Mining stocks like Riot Platforms and MARA Holdings have seen double-digit declines as fears of bankruptcy in the sector grow. If prices do not recover soon, we may see forced selling of miner treasuries, adding further supply pressure to an already saturated market.

Ethereum Slumps Below $1,900 in Altcoin Rout

While Bitcoin grabs the headlines, the wider market is suffering arguably worse losses. The Ethereum price slump in Feb 2026 has been severe, with the second-largest cryptocurrency crashing over 30% in a single week to hit lows around $1,850. This marks a multi-month low for ETH, which has struggled to maintain support amidst fleeing institutional capital and outflows from spot ETFs.

The correlation between Bitcoin and altcoins remains tight, meaning Ethereum's recovery is entirely dependent on Bitcoin stabilizing above the $65,000 support level. For now, the "altcoin season" narrative has been replaced by a fight for survival, with many smaller tokens losing 50-60% of their value in just days.

Outlook: Is the Bottom In?

Investors are now asking if this Bitcoin price crash of 2026 is a capitulation event that marks a bottom, or the start of a prolonged crypto winter. The "distressed selling" from miners and the sheer volume of liquidations suggest a cleansing of leverage, which often precedes a recovery. However, with macroeconomic headwinds and the MicroStrategy 12 billion loss looming large, cautious accumulation rather than aggressive buying appears to be the prudent strategy.