Bitcoin Crashes Below $61K

Bitcoin fell below $61,000 this week, dragging the Crypto Fear & Greed Index to levels not seen since the collapse of FTX in late 2022. According to data tracked by Bitz.io, on-chain sell pressure from large holders accelerated sharply over the past seven days, pushing total crypto market capitalization down by over $800 billion from its recent highs.

The question everyone is asking right now is simple: is this the start of something worse, or the kind of fear that historically marks a bottom?

What the fear & greed index actually tells us

The Crypto Fear & Greed Index measures market sentiment on a scale from 0 (extreme fear) to 100 (extreme greed). It pulls data from volatility, trading volume, social media activity, Bitcoin dominance, and Google Trends.

As of February 6, 2026, the index sits at 19, deep in “extreme fear” territory. The last time it dropped this low was November 2022, right after FTX went bankrupt.

But here’s the thing most people miss about this indicator: extreme fear readings have historically been better buy signals than sell signals.

Every extreme fear period since 2020 – and what followed

Looking at Bitcoin’s price action after every period where the Fear & Greed Index dropped below 20, a clear pattern shows up:

March 2020 (COVID crash): The index hit 8. Bitcoin was trading near $4,800. Within 12 months, it was above $58,000, a gain of over 1,100%.

May–July 2021 (China mining ban): The index dropped to 10. Bitcoin fell from $64,000 to around $29,000. Six months later, it hit a new all-time high of $69,000.

June 2022 (Terra/LUNA collapse): The index fell to 6. Bitcoin bottomed near $17,500. It took longer to recover, but by early 2024, it was back above $70,000.

November 2022 (FTX collapse): The index hit 20. Bitcoin traded around $15,800. Within 16 months, it had climbed past $73,000.

None of these recoveries happened overnight. But in every single case, buying during extreme fear outperformed buying during greed over a 6–12 month window.

Why whales are selling and retail is buying

On-chain data from Santiment shows a divergence that has repeated in previous cycles: wallets holding 100+ BTC have been net sellers over the past two weeks, while wallets holding less than 1 BTC have been accumulating.

This pattern showed up before the 2021 summer bottom and again before the 2022 bottom. Large holders take profits or cut risk early, while smaller investors step in to buy what they see as a discount.

“Whale selling during a fear-driven dip doesn’t necessarily mean the market is going lower,” said Mati Greenspan, founder of Quantum Economics. “It often means smart money is de-risking, not panicking. The panic is usually in the retail crowd, but this time, retail is actually buying.”

That said, whale behavior alone isn’t enough to call a bottom. It’s one signal among many.

The $42,000 question

Multiple analysts have flagged $42,000 as a key support level if the current slide continues. This level aligns with the 200-week moving average, which has historically acted as a floor during bear markets.

Bitcoin has never closed a weekly candle below its 200-week moving average for more than a few weeks before bouncing back. If that level breaks and holds below it, it would be a first, and a serious warning sign.

However, reaching $42,000 from current levels would require another 30%+ drop, which would likely need a catalyst beyond the current macro uncertainty.

Peter Brandt, a veteran trader with over 40 years of market experience, noted on social media: “The 200-week MA has been the ultimate buy zone for Bitcoin in every cycle. Breaking it would change the entire thesis.”

Macro factors adding pressure

The crypto selloff isn’t happening in a vacuum. Several macro factors are stacking up:

The Nasdaq lost over $1 trillion in market value this week, dragged down by disappointing earnings from major tech companies and renewed fears about AI spending. The S&P 500 followed, and the Australian ASX posted its worst day in nearly a year.

Global bond yields are climbing again as central banks signal that rate cuts may come slower than markets expected. Higher yields make risk assets like Bitcoin less attractive compared to fixed income.

Meanwhile, trade tensions between the U.S. and China have reignited, adding uncertainty to global markets. Historically, Bitcoin has not been immune to macro risk-off events, despite the “digital gold” narrative.

Binance FUD vs. on-chain reality

Adding to the fear this week were social media posts comparing Binance to FTX, a claim that on-chain data does not support. Binance’s proof-of-reserves data shows the exchange still holds more than $60 billion in assets, and its SAFU (Secure Asset Fund for Users) insurance fund recently purchased $233 million worth of Bitcoin, pushing its BTC holdings higher.

On-chain analysts at CryptoQuant confirmed that Binance’s net flows remain healthy, with no signs of the kind of reserve depletion that preceded the FTX collapse. The comparison appears to be driven more by fear than facts.

What actually matters right now

Sentiment indicators, whale movements, and support levels all point to one takeaway: this is a high-fear environment, and historically, high-fear environments have rewarded patience.

That doesn’t mean Bitcoin can’t go lower. It can. Support levels can break. Macro conditions can worsen. But the data shows that selling during extreme fear has consistently been the wrong move over any meaningful time horizon.

The traders and investors who performed best in previous cycles were the ones who had a plan before the fear hit, not the ones who made decisions while it was happening.

For now, the market is in wait-and-see mode. The next few weeks will likely determine whether this is a mid-cycle correction or something deeper. Either way, the fear is real, but so is the historical pattern of what comes after it.