$2.3 billion liquidation night, who is bottom fishing and who is being harvested?

Crypto market horror 12 hours! $2.3 billion liquidation bloodbath reshapes industry rules

In the early hours of February 1, 2026, the crypto world experienced an epic liquidation night! BTC plummeted to $75,719.9, directly breaking through the market’s recognized institutional cost line. Over 12 hours, the entire network saw $2.367 billion in liquidations, of which $2.22 billion were long positions liquidated, with the fierce battle between bulls and bears rewriting market perceptions. This steep decline triggered by high leverage appears to be a short-term emotional release, but in fact, it has brought about a disruptive chain reaction across the crypto industry, redefining the ecosystem and trading logic.

The core trigger for this crash was the burst of a long-standing high leverage bubble in the market. Previously, the crypto community collectively bet on a unilateral rise of mainstream coins, with many investors increasing leverage to chase gains, turning the market into a powder keg ready to explode. When BTC fell below MicroStrategy’s institutional cost line of approximately $76,037, it ignited panic. The speculation of “institutional unrealized losses” triggered a herd effect, with automatic and passive liquidations creating a chain reaction. The order book was instantly emptied, and the typical leverage liquidation spiral caused the market to fall faster and recover even quicker—a death spiral of “the steeper the fall, the faster the rebound.”

The rapid spread of panic further reversed the short-term ecosystem of the crypto world. The Fear and Greed Index plummeted to 14, entering the “extreme fear” zone. Funds that had chased higher prices shifted to observation and reducing positions. Derivatives market liquidity shrank significantly, and thinner order books amplified subsequent volatility. Professional traders also collectively shifted to defensive strategies, with even whale agents liquidating over $700 million in a single account. Once aggressive long positions now prioritized capital preservation, and the market sentiment shifted from frenzy to caution.

This wave of liquidations also exposed the brutal truth of capital stratification in the crypto industry, with the Matthew Effect being unprecedentedly reinforced. On one side, retail traders with high leverage accounts were bloodied and forced to surrender chips at low levels; on the other side, mysterious whale address “7 Siblings” bought up 12,806 ETH against the trend and even placed unfilled orders to continue accumulating. Large funds with low leverage and long-term horizons are using extreme volatility to dilute costs, while high-leverage players chasing short-term profits are being accelerated out of the market. The player structure in the crypto industry is undergoing a major reshuffle.

However, this turbulence is not a reversal of the long-term trend but a thorough deleveraging. The long-term impact on the crypto industry warrants caution. The market’s over-reliance on narratives like “institutional cost lines” has been proven to be a major factor in amplifying volatility. Future discussions and trading strategies around key price levels will become the norm. Meanwhile, the industry faces the toughest survival test: the era of high-leverage speculation has ended. Proper position management, setting stop-losses, and reserving liquidity are now fundamental principles for crypto participants to survive.

This liquidation night has taught the crypto industry a profound lesson: respecting the market and managing risks are eternal survival rules. Leverage can amplify gains but also risks. When bubbles burst, only those who adhere to risk control can stand firm in the next cycle of the crypto market. #加密市场回调 $BTC