Bitcoin Prints Second-Largest Capitulation Spike in 2 Years

Bitcoin experienced its second-largest capitulation signal in two years on Thursday, February 5, following a rapid increase in on-chain metrics of forced selling reported by Glassnode.

The world’s largest cryptocurrency dropped below $70,000, wiping away nearly all of the price gains it had made since reaching its $69,000 all-time high in 2021.

At the time of writing, the price of Bitcoin on major exchanges was approximately $69,040. This decline was driven by large-scale liquidations across derivatives markets. CoinGlass reported that more than $1 billion in long positions were eliminated within a 24-hour period, significantly contributing to the downward pressure.

Glassnode Reports Evidence of Market Stress

Glassnode provided evidence that the capitulation metric for Bitcoin increased significantly as the price of the cryptocurrency dropped, representing an extremely stressful period for the cryptocurrency market.

“BTC capitulation metric has posted its second-largest spike in two years, indicating a significant rise in forced selling,” Glassnode said in its February 5 market update.

Glassnode’s chart shows the capitulation indicator (red) as the price of Bitcoin (black) fell towards the $69,000 area. Stress events such as these have historically been linked to forced liquidation among leveraged traders and rapid investor risk reduction, according to Glassnode.

“Stress events, such as those described above, have historically been characterized by both increased de-risking and higher volatility as investors attempt to reposition,” noted Glassnode authors Chris Beamish and Antoine Colpaert.

The Glassnode authors pointed to low “spot” volumes as another sign of weakness in demand for the cryptocurrency. “Spot BTC volumes remain structurally weak, which indicates a demand deficit in which seller pressure is not being met with sustained absorption,” Beamish and Colpaert stated.

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Derivative Contracts Contribute to Price Drop

The large fall in the price of Bitcoin was also influenced by the large number of leveraged contracts being liquidated. This occurred as Bitcoin continued to slide toward the $70,000 level.

According to CoinGlass data, the majority of the liquidated contracts were longs. This indicated that many overly bullish investors were adversely affected by the downward movement in the price of BTC. Also, implied volatility jumped sharply in the options markets as investors scrambled to protect themselves against a potential loss in value.

Source: CoinGlass

Institutional Flows Decline

Also, institutional demand has been decreasing as evidenced by the large number of withdrawals from U.S. spot Bitcoin ETFs. There was $545 million in net outflows yesterday, according to SoSoValue data. Institutional demand was a previous source of support for the cryptocurrency, helping to prevent a more severe price correction. 

Additionally, corporate treasuries will also be negatively impacted. The Glassnode report stated that many large holders of Bitcoin who purchased the cryptocurrency during periods of higher costs will now experience an unrealized loss as the BTC price continues to trade at levels below their original purchase price. 

Why This Matters 

The Glassnode capitulation spike suggests that forced selling is currently the dominant force in the cryptocurrency market, and volatility will continue until new buyers emerge to absorb the excess supply.

Also Read | Bitcoin’s Rebound Masks Bearish Signals: Is Deeper Correction Ahead in 2026?