Bitcoin fell below the closely watched $80,000 level over the weekend after markets digested the confirmation of Kevin Warsh as the next Federal Reserve chairman, sparking a wave of leveraged divestitures in cryptocurrency markets, according to analysts at QCP Asia.
Key points:
- Bitcoin fell below $80,000 after Warsh’s appointment to the Federal Reserve, which triggered a wave of deleveraging and liquidations exceeding $2.5 billion.
- Risk aversion has spread beyond the cryptocurrency market, putting pressure on stocks and precious metals as markets price in a more hawkish path from the Federal Reserve.
- Bitcoin has stabilized near $74,500, but analysts warn of the potential for further decline if key support fails.
In a market note released Monday, QCP said bitcoin briefly fell to around $74,500 after breaking key technical support, while ether fell below $2,170.
This decline led to the liquidation of more than $2.5 billion in leveraged long positions, adding downward pressure at a time when sentiment was already fragile due to continued outflows from U.S. Bitcoin spot funds.
Warsh’s selection as head of the Federal Reserve sparked risk aversion in the markets
Risk aversion following the announcement of Warsh’s appointment has extended beyond the cryptocurrency market. Stocks weakened and traditional safe havens such as gold and silver extended their declines from recent highs, as traders reassessed the likely direction of policy under Warsh’s leadership at the Fed.
Markets have begun to price in a greater likelihood of rapid policy normalization or tightening of conditions, weighing on non-productive assets.
Higher margin requirements in the futures markets have also accelerated the liquidation of leveraged positions, according to QCP.
Bitcoin has since stabilized above $74,500, an area consistent with cycle lows seen in 2025. Options markets continue to be cautious, with positioning still skewed toward downside protection, although demand for downside hedging has eased compared to previous bouts of stress.
QCP noted that during November’s decline from $107,000 to around $80,500, hedging activity was much more aggressive than is currently the case, near the mid-$70,000 range, suggesting that some of the exposure had already been liquidated.
QCP: BTC fell below $80,000 after Kevin Warsh was confirmed as the next Fed chairman, triggering a widespread sell-off. BTC briefly hit $74,500, ETH fell below $2,170 and over $2.5 billion in leveraged long positions were liquidated, with $74,000 and $80,000 as key levels to watch…
-Wu Blockchain (@WuBlockchain) February 2, 2026
However, analysts have warned that price action remains vulnerable to risks. Momentum indicators are still pointing lower and upside potential appears limited near recent resistance, leaving the market vulnerable to further sell-off induced moves should support fail.
A sustained break below $74,000 could open the door for a deeper pullback towards levels last seen in 2024, while a decisive retracement of $80,000 could help ease volatility and stabilize sentiment.
“In the current environment, attention will likely focus on the resurgence of institutional accumulations, particularly given the strategy’s average cost basis near $76,000, as well as any mitigation of geopolitical risks, particularly those related to Iran,” QCP said.
“The Fed’s intervention measures will also be closely watched, as any statement by Chairman-elect Warsh tempering tightening expectations could have an additional stabilizing effect,” the analyst added.
Bitcoin’s fall to $77,000 sparked talk of a session low
Bitcoin’s fall over the weekend to around $77,000 could represent a session low, according to analyst PlanC, who said the move has the hallmarks of a capitulating decline rather than the start of a longer-term pullback.
Bitcoin briefly touched this level before stabilizing and rebounding towards $78,600, although it is still more than 11% lower for the month and more than 38% below its October high near $126,100.
PlanC compared the recent decline to previous declines that preceded major rallies, including the 2018 bear market low, the March 2020 Covid low, and the sharp declines that followed the collapses of FTX and Terra-Luna.
He estimated that the current cycle low is likely between $75,000 and $80,000, noting that the move could represent a final selloff within an ongoing bull cycle.
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