Market update - February 6th, 2026

Bitcoin price is falling: understanding why

Recent price action in bitcoin has once again seen markets overshoot fundamentals, a pattern typical of sharp corrections in digital assets. When sentiment becomes disorderly and price detached from underlying signals, it is often more useful to focus on positioning, flows and structural stress indicators to assess whether downside momentum is close to exhaustion.

Several of those signals are now aligning. Global crypto ETPs recorded their highest daily trading volumes on record yesterday at US$18.5B. Such volume spikes during drawdowns have historically reflected capitulation rather than renewed conviction selling. While net fund outflows have slowed, troughs in the rate of change of flows, rather than outflows themselves, have tended to mark local lows in prior cycles.

On-chain behaviour supports this view. Entities holding more than 10,000 bitcoin had previously sold roughly US$28B during the sell off (since October 2025), but that selling has paused. Over the past two weeks, these large holders have added approximately US$4.7B of bitcoin. Sustained bottoms have rarely formed without a stabilisation, and eventual reversal, in whale positioning, this turning point isn’t conclusive yet but an encouraging sign.

Price currently below the estimated average cost of mining

From a production standpoint, bitcoin is now trading well below the estimated average cost of production for listed miners, which we place at around US$74,600. Periods where spot prices remain materially below production costs have historically been short lived, reflecting the pressure this places on miner balance sheets, capital expenditure and marginal supply.

Behavioural signals are also consistent with late stage stress. Reports of retail investors being locked out of trading platforms due to surging volumes have historically coincided with periods of peak selling pressure rather than the start of prolonged declines.

The macro backdrop is turning more supportive at the margin. Yesterday’s JOLTS report was significantly weaker than expected, with job openings falling to multi-year lows. This has driven a sharp increase in market implied probabilities for a June rate cut, despite uncertainty around future Fed leadership. While a more hawkish chair could constrain policy, weakening labour data reduces the scope for restrictive interest rates to persist without political and institutional tension.

Amid the drawdown, concerns around quantum computing have resurfaced, but these remain materially overstated. Quantum risks are theoretical, distant, and narrowly scoped, affecting a small subset of legacy addresses. Bitcoin’s core monetary properties remain intact, and the protocol has ample time and clear pathways to adopt post quantum cryptography if required. This is an engineering consideration, not an investment thesis breaker, we have written in detail about it here.

As downside pressures appear to be easing, it is worth refocusing on the fundamental case for bitcoin. Bitcoin remains a scarce, non sovereign monetary asset with a fixed supply and no dependence on institutional credibility. In an environment of rising fiscal dominance, politicised monetary policy and eroding trust in traditional stores of value, that core investment case remains unchanged.