In the volatile world of cryptocurrency markets, where bitcoin’s price swings can erase billions in value overnight, investors are grappling with yet another downturn. As of early February 2026, major tokens like bitcoin and ether have fallen sharply, prompting questions about whether the bottom is in sight. A fresh analysis from Wall Street firm Jefferies sheds light on this uncertainty, highlighting persistent pressures while pointing to potential bright spots for assets with solid underlying value.
Jefferies Analysis Highlights Liquidity-Driven Correction in Crypto Markets
Jefferies’ latest research note, released this week, examines the ongoing crypto selloff, concluding that there are few indicators of an imminent market bottom. Despite bitcoin trading near $64,800—a level that has historically attracted bargain hunters—and ether hovering around $1,900, the bank views the decline as primarily a liquidity crunch and broader risk aversion rather than a fundamental breakdown in blockchain technology. The report emphasizes resilient network activity and targeted corporate accumulation of bitcoin as signs that the sector’s infrastructure holds firm. However, it warns of amplified volatility from over $2 billion in recent long liquidations, which have exacerbated daily price swings across leading tokens.
Key Near-Term Headwinds Facing the Market
Jefferies identifies several factors contributing to the current weakness:
- Institutional Selling Pressure: Large bitcoin holders continue to offload assets, while spot ETF net outflows persist, signaling ongoing de-risking in institutional portfolios.
- Global Risk-Off Sentiment: The downturn aligns with a broader shift away from growth-oriented investments, reviving “crypto winter” comparisons to past bear markets.
- Retail vs. Institutional Dynamics: Smaller and mid-sized holders are largely retaining positions, but centralized exchange volumes and decentralized lending have stabilized only after earlier surges, indicating uneven recovery signals.
Bitcoin’s current price represents a roughly 47% drop from its October 2025 peak of about $123,500, while ether has declined nearly 60% from its previous cycle highs. These levels, while familiar to dip buyers, do not yet suggest capitulation, per the analysis.
Long-Term Catalysts for Revenue-Linked Tokens
Despite the cautious outlook, Jefferies avoids a fully bearish stance, forecasting that selective gains could emerge for tokens backed by revenue-generating blockchains. The bank anticipates catalysts such as:
- Regulatory Advancements: Progress in clearer frameworks could boost confidence and adoption.
- Infrastructure Improvements: Maturing blockchain ecosystems may enhance scalability and utility.
- Traditional Finance Integration: Increased participation from TradFi institutions could drive demand for fundamentally sound assets, leading to performance divergence rather than a uniform rebound.
"While warning that selling by large holders and spot ETF outflows remain near-term headwinds, Jefferies expects longer-term catalysts such as regulatory progress and traditional finance participation to spur more selective gains in revenue-linked tokens rather than a broad market rebound."
This perspective underscores a market maturing beyond speculative hype, potentially favoring projects with real economic activity over pure momentum plays. No specific price targets or timelines were detailed in the note, and uncertainties around global economic conditions could prolong the correction. As crypto navigates this phase, how do you view the role of institutional de-risking in shaping the next bull cycle?
Fact Check
- Jefferies’ report describes the crypto downturn as liquidity-driven, with bitcoin at approximately $64,800 (47% below its October 2025 high of $123,500) and ether at $1,900 (down nearly 60% from prior peaks).
- Over $2 billion in long liquidations have contributed to heightened volatility, amid steady network usage and selective corporate bitcoin buying.
- Near-term risks include large holder sales and spot ETF outflows, while long-term positives involve regulatory clarity and TradFi adoption for revenue-linked tokens.
- Smaller holders are holding steady, with exchange and DeFi volumes stabilizing post-spikes.
