Week 6, 2026

The sixth week of January 2026 marked a watershed moment for crypto markets as Trump's nomination of hawkish Fed governor Kevin Warsh sent shockwaves through digital assets. Within 72 hours of the announcement, Bitcoin plunged 17%, Ethereum crashed 18%, and $1.68 billion in leveraged positions were liquidated. The crypto Fear & Greed Index collapsed into extreme fear territory at 18, while Bitcoin ETFs hemorrhaged $1.49 billion in their worst weekly outflows since launch. By week's end, Bitcoin had surrendered all gains since Trump's November 2024 election, trading near $71,000 (down 44% from October's $127,000 all-time high).

1. Trump Nominates Hawkish Kevin Warsh as Fed Chair, Crypto Crashes 17%

Headline: Former Fed Governor's "Higher-for-Longer" Stance Triggers $250 Billion Market Wipeout

On January 30, President Trump nominated Kevin Warsh to replace Jerome Powell as Federal Reserve Chair (effective May 2026 pending Senate confirmation). Markets reacted violently: Bitcoin crashed from $89,000 to $81,000 within hours (down 7% same-day), gold plunged 20%, silver crashed 40%, and the dollar rallied as traders priced in tighter monetary policy. Warsh, age 55, served as the youngest Fed Governor in history (2006-2011) during the financial crisis and is known for prioritizing inflation control over economic growth, favoring higher real interest rates, accelerated balance sheet reduction, and skepticism toward excessive quantitative easing.

Impact: Warsh's appointment represents a fundamental regime change for risk assets. His track record shows consistent hawkishness (citing inflation risks even during the 2008 deflation crisis) and advocacy for monetary discipline over market accommodation. While he has called Bitcoin a "policeman" exposing policy errors and invested in crypto startups (Bitwise, Electric Capital), he views digital assets as speculative bets that thrive only in low-rate environments. Markets immediately repriced 2026 expectations: CME FedWatch now shows just 16% probability of March rate cuts (down from 40%+ in November), slower pace of cuts throughout 2026, and potential acceleration of quantitative tightening. For crypto, this means sustained restrictive liquidity conditions, higher real borrowing costs (currently ~1.5% real rates vs. -2% in 2021), and removal of cheap capital that fueled 2021-2025 rallies.

2. Bitcoin ETFs Hemorrhage Record $1.49 Billion in Worst Week Since Launch

Headline: BlackRock's IBIT Loses $947M as Institutional Investors Slash Crypto Exposure

U.S.-listed spot Bitcoin ETFs suffered their worst week on record, bleeding $1.49 billion in net outflows from January 26-30. BlackRock's IBIT led the exodus with $947.2 million in redemptions (equivalent to 11,170 BTC sold), while Fidelity's FBTC managed only $7.3 million in inflows (insufficient to offset the selling pressure). January 30 alone saw $818 million in single-day outflows, erasing all January gains and pushing monthly net flows negative. Ethereum ETFs lost $327 million during the same period, with January 30 recording $252.9 million in worst single-day redemptions.

Impact: The ETF outflow cascade created a self-reinforcing liquidation spiral. When institutions redeem ETF shares, sponsors must immediately sell underlying BTC/ETH to meet redemption demands, creating forced selling into falling markets. This mechanism triggered Bitcoin's break below the critical $85,000 support level (100-week simple moving average), which then prompted $1.75 billion in leveraged long liquidations within 24 hours. The average IBIT investor is now underwater (per asset manager Bob Elliott), with entry prices above current levels. 2026 year-to-date flows now show $32 million net outflows, a stark reversal from $35 billion combined inflows in 2024-2025.

3. $1.68 Billion Liquidation Event Crushes Leveraged Longs in 24-Hour Cascade

Headline: 93% of Liquidations Were Long Positions as Bitcoin Tests $70,000 Support

Week 6 witnessed one of crypto's most violent deleveraging events as $1.68 billion in positions were forcibly liquidated on January 30 alone, with 93% being long positions. Bitcoin briefly touched $81,000 (lowest since November 2024) before partial recovery, while $775 million in additional liquidations hit on February 5 as BTC tested $70,000. The cascade was concentrated across Binance, Bybit, and OKX, with peak hourly spikes exceeding $268 million. Approximately 90 of the top 100 tokens fell an average of 4.6%, and total crypto market cap shed $120-140 billion intraday.

Impact: The liquidation event exposed crypto's structural fragility under macro stress. High leverage (average 20-50x on perpetual futures) combined with thin weekend/Asia liquidity created perfect conditions for a leverage flush. When Bitcoin broke $85,000 support, it triggered cascading stop-losses and margin calls, forcing exchanges to automatically close positions and sell into an illiquid market. By February 5, Bitcoin had fallen 44% from its $127,000 October peak, officially entering bear market territory.

4. Bitcoin Erases All Post-Election Gains, Trades Below $71,000

Headline: BTC Down 44% From Peak as $70,000 Psychological Barrier Crumbles

Bitcoin closed Week 6 trading near $71,000, officially surrendering all gains since Trump's November 2024 re-election. The world's largest cryptocurrency fell nearly 20% in January 2026 alone and has now declined 44% from October 2025's $127,000 all-time high. Ethereum performed worse, crashing to $2,068 (lowest since May 2025, down 55% from its $4,946 September peak). XRP plunged 7% below $1.40, Solana tested $100 support, and Dogecoin battled $0.10 support as altcoins entered capitulation.

Impact: Bitcoin's failure to hold $71,000 has severe technical implications. The next critical support sits at $68,000 (200-week exponential moving average), which has historically defined long-term bull/bear boundaries. A break below $68,000 would likely trigger additional ETF outflows and test the $55,700-$58,200 bear market low zone. Strategy (MicroStrategy) now faces over $900 million in unrealized losses on its 712,647 BTC holdings.

5. MicroStrategy Faces $900M Unrealized Loss as Corporate Bitcoin Bets Sour

Headline: Strategy's 712,647 BTC Position Down $900M as "Bitcoin Treasury" Strategy Questioned

MicroStrategy (now trading as Strategy), the largest corporate Bitcoin holder, is facing over $900 million in unrealized losses as Bitcoin trades below the company's ~$75,000 average cost basis. The company holds 712,647 BTC acquired through aggressive debt offerings and equity raises. Michael Saylor's bet that Bitcoin would reach $200,000+ by 2026 now appears badly mistimed.

Impact: Strategy's situation epitomizes the risks of corporate Bitcoin treasury strategies during bear markets. The company's stock (MSTR) is down significantly as investors question the sustainability of debt-funded accumulation. Other corporate holders face similar pressure: Tesla, Block (Square), Marathon Digital, Riot Platforms, and Coinbase all hold substantial BTC at various cost bases. The "Bitcoin Treasury" narrative that dominated 2024-2025 corporate finance discussions now looks premature: companies assumed perpetual liquidity, accommodative Fed policy, and continuous institutional adoption. The Warsh regime change invalidates all three assumptions.

Week 6 Summary: Hawkish Fed Pick Triggers Capitulation

Week 6 delivered the most severe crypto correction of 2026 as Trump's surprise nomination of hawkish Fed governor Kevin Warsh triggered a multi-day liquidation cascade. Within 72 hours, $250 billion evaporated from crypto markets, Bitcoin ETFs hemorrhaged $1.49 billion, and $1.68 billion in leveraged positions were forcibly closed. Bitcoin surrendered all post-election gains, trading below $71,000 by week's end (down 44% from October's peak).

The Warsh Effect cannot be overstated. His nomination immediately repriced 2026 rate expectations: March cut probability collapsed to 16%, consensus shifted to "higher-for-longer" through 2026, and markets began pricing accelerated balance sheet reduction. For crypto (an asset class that thrives on cheap capital and loose liquidity), this represents a fundamental regime change.

Key takeaways:

• Trump's Fed Chair pick (Kevin Warsh) triggered the worst crypto crash of 2026, with $250B market cap loss in 72 hours
• Bitcoin ETFs saw record $1.49B weekly outflows (BlackRock's IBIT lost $947M), forcing spot selling into falling markets
• $1.68 billion liquidation cascade (93% longs) exposed structural fragility of leveraged crypto markets during thin liquidity
• Bitcoin erased 16 months of gains, trading below $71,000 and surrendering all post-Trump-election momentum
• Crypto Fear & Greed Index at 18 (extreme fear) suggests capitulation phase, but prior bear markets showed 6-12 month consolidations

Outlook depends entirely on two variables: (1) Will Warsh moderate his hawkish stance during Senate confirmation hearings? (2) Will macro conditions deteriorate enough to force Fed pivot? Until either changes, expect extended consolidation or further downside. The $68,000 level (200-week EMA) is the line in the sand: hold it, and this remains a correction within a bull market; lose it, and we enter a multi-month bear market targeting $55,000-$58,000.