Bitcoin Volatility: Challenges and Risks

Over the past day, the leading cryptocurrency fell by 4.3%, and since the beginning of February—by almost 20%. According to Coinglass data, this is the strongest monthly drop since June 2022, when the market was experiencing a crisis following the Terra collapse.

Fig. 1 — Bitcoin monthly returns since 2013. Source: Coinglass

The total cryptocurrency market capitalization fell 3% over the past day to $2.19 trillion. Ethereum (ETH) is trading around $1,820, down 3.4% in the last day and 63% off its August high near $5,000. Among the top 100 cryptocurrencies, Bitcoin Cash (BCH) saw the largest drop at 11%. BCH remains in the top 10, where it entered in February, displacing Cardano (ADA).

Over the past day, crypto exchanges liquidated positions of 121,000 traders totaling $375 million. Of this, $290 million came from long positions. U.S. spot Bitcoin ETFs recorded a net outflow of $203 million on February 23, with about $50 million withdrawn from Ethereum ETFs. Outflows from major crypto funds have continued for the fourth straight month. In February, $1.2 billion was withdrawn from Bitcoin ETFs and about $500 million from ETH funds.

The Fear and Greed Index stands at 8 out of 100—in the "extreme fear" zone. This indicates that market participants are inclined to actively sell off cryptocurrencies.

BTC has become noticeably more dependent on the overall state of the global economy, world finance, and geopolitical instability. This means Bitcoin is increasingly less driven by the laws and logic of the crypto market and more reactive to global uncertainty, the behavior of institutional investors and regulators, and general sentiment in financial markets.

Factors that previously pushed prices up have failed to deliver. Neither the creation of a U.S. strategic BTC reserve nor the ETF launch ensured sustained growth. Since the October 2025 highs, BTC's price has steadily declined. Additional downward pressure comes from the risk of new armed conflicts, general investor uncertainty, and the unpredictability of Donald Trump's policies.

The sharp decline in new crypto wallet creations in 2025 signals weakening retail interest.

In the short term, the most likely scenario is a continuation of price declines, though not as dramatic as in February. The main indicator of stabilization is a halt in ETF outflows.

Fig. 2 — Bitcoin price by day since January 27, 2026. Source: CoinMarketCap

In the long term, unless events occur that fundamentally undermine confidence, the price will return to its highs. The current situation is a stress test for the market, demonstrating its resilience to external shocks, the outflow of institutional money, declining liquidity, and the volatility of investor sentiment.

However, there is currently no reason for investor panic. Although predicting the price of Bitcoin, even in the near term, is quite difficult.

Author: Doctor of Economic Sciences, Professor of the Department of World Economy and World Finance at the Financial University under the Government of the Russian Federation Galina Alekseevna Bunich.

Author: Candidate of Technical Sciences, Associate Professor of the Department of World Economy and World Finance at the Financial University under the Government of the Russian Federation Mikhail Gennadievich Bich.