In-Depth Analysis: Why Do BTC and ETH Corrections Trigger Panic Selling? A Comprehensive View of Market Sentiment, Derivatives, and Capital Flows

In the first quarter of 2026, the cryptocurrency market failed to sustain the mild upward trend seen earlier in the year and recently experienced a significant correction. As the prices of the market’s two engines, Bitcoin (BTC) and Ethereum (ETH), declined in tandem, widespread attention and some investor panic ensued. As of February 10, 2026, according to Gate data, Bitcoin is priced at $68,842, down 1.02% over the past 24 hours, while Ethereum has fallen to $2,003.96, a 3.02% drop in the same period. Is this correction a healthy “shakeout” in a bull market, or the beginning of a deeper trend change? This article will analyze the underlying reasons for recent price fluctuations from multiple perspectives, including macro environment, derivatives market dynamics, and on-chain fund flows.

Core Cause 1: Shift in Macro Sentiment and Tightening Liquidity Expectations

The crypto market is no longer an isolated domain; its correlation with traditional financial markets is increasing. Recent macro factors fueling market concerns mainly focus on two points:

• Repeated inflation data and uncertain interest rate paths: Although inflation in major global economies has retreated from highs, recent inconsistent key economic data has raised doubts about the timing of central bank policy shifts. Investors worry that premature or delayed rate cuts could negatively impact the economy, and this uncertainty diminishes the appeal of risk assets.
• Marginal changes in US dollar liquidity: Cryptocurrencies, especially Bitcoin, are often viewed as “liquidity sponges.” When market expectations suggest a slowdown in global dollar liquidity expansion, some high-liquidity seeking funds tend to withdraw from high-risk assets first, seeking safer havens. This exerts direct pressure on BTC and ETH buying demand.

Core Cause 2: The “Domino Effect” in the Derivatives Market

In this correction, the derivatives market played an accelerating role. After prices started to decline slightly, a chain reaction was triggered:

• Liquidation of high-leverage positions: During bullish cycles, many investors use leverage to amplify gains. When prices break below key support levels (e.g., BTC’s psychological $70,000 mark and ETH near $2,100), large-scale forced liquidations occur. Gate data shows BTC’s 24-hour low reached $68,302.1, and ETH hit $1,998.13. These levels attracted numerous leveraged long positions, and cascading liquidations intensified selling pressure, causing prices to drop sharply.
• Return of funding rates and cooling sentiment: During bullish exuberance, perpetual contract funding rates tend to stay positive and high, meaning longs pay shorts continuously. When prices decline, funding rates quickly revert to neutral or negative, which, while beneficial for long-term market health, also reflects a rapid cooling of bullish sentiment and prompts some speculative funds to exit.

Core Cause 3: On-Chain Data and Fund Flows Confirmations

On-chain data provides insights into whale and long-term holder behavior, revealing sources of selling pressure:

• Increased exchange inflows: During the price decline, BTC and ETH inflows to centralized exchanges like Gate increased temporarily. This often indicates holders preparing to sell, adding immediate supply to the market. With BTC’s 24-hour trading volume reaching $953.25 million and ETH’s $349.21 million, it’s clear that market turnover is high and sentiment is divided.
• Micro-adjustments among long-term holders (HODLers): Some on-chain analyses show that certain long-term addresses have taken profits as prices approached previous highs. While not a mass capitulation, this loosening of holdings weakens support levels below.

Combining Gate Data for Market Outlook: Rational Perspective on Cyclical Fluctuations

In the face of volatility, rational data analysis is more important than emotional trading. Based on Gate’s market data, research, and historical models, the market still has a solid foundation for long-term development after this correction.

• Bitcoin (BTC): Its market cap remains robust at around $1.41 trillion, with a market share exceeding 56%, demonstrating resilience of core assets. Long-term forecasts suggest an average price around $70,791.3 in 2026, with a range between approximately $57,340.95 and $91,320.77. Looking further ahead to 2031, long-term models project a potential price range of $72,037.26 to $149,511.29.
• Ethereum (ETH): As the ecosystem’s core, its $252.82 billion market cap remains solid. According to Gate’s forecasts, ETH’s average price in 2026 is expected to be about $2,095.27, with a range from roughly $1,320.02 to $2,283.84. Over the long term, by 2031, the potential price range is estimated between $2,863.02 and $4,481.25.

Conclusion: Panic Stems from the Unknown; Understanding Brings Confidence

Every significant correction tests market participants’ comprehension and psychology. The recent panic selling in BTC and ETH is fundamentally the result of multiple factors: macro uncertainties, high leverage in derivatives, and short-term profit-taking. It exposes the fragility after rapid gains and is a necessary process to prune bubbles and solidify foundations.

For investors, at this stage, it’s more prudent to focus on:

• Whether on-chain fundamentals are deteriorating (e.g., significant long-term holder disposals).
• Clear signals from macro policy shifts.
• The capital game around key support levels for mainstream cryptocurrencies like BTC and ETH.

Markets cycle between euphoria and fear. Understanding the complex drivers behind volatility enables navigating cycles more wisely. You can stay updated on the latest market developments through Gate’s real-time quotes and professional analysis tools.