The crypto market stayed under pressure on Monday, Feb. 9, as a short-lived recovery lost steam and fresh global concerns weighed on investor sentiment. Bitcoin slipped below a key price level, and the broader market followed suit, reflecting growing caution across risk assets.
Bitcoin fell more than 2.6% on the day, dropping below the important $70,000 support mark. The total market value of all cryptocurrencies declined by around 2.75% in the past 24 hours. At the same time, the Crypto Fear and Greed Index remained stuck in the “extreme fear” zone, showing that traders are still nervous about what comes next. Liquidations surged, with positions worth about $356 million wiped out as prices moved lower.
The pullback in crypto mirrored weakness in traditional markets. Futures linked to the Dow Jones and Nasdaq 100 also slipped, giving back some of the gains seen at the end of last week. Rising U.S. government bond yields added more pressure, making safer assets more attractive compared to high-risk investments like cryptocurrencies.
One of the key developments shaking markets came from China. Regulators in the country reportedly asked banks and other financial institutions to reduce their exposure to U.S. Treasuries. Institutions with heavy exposure were encouraged to cut back. According to Bloomberg, the move is being framed as a risk diversification effort rather than a direct response to geopolitical tensions. Officials are said to be concerned that holding large amounts of U.S. debt could expose firms to greater volatility in the future.
China has already been trimming its U.S. Treasury holdings over the past few years. The country now holds about $682 billion worth of U.S. government bonds, down sharply from more than $1 trillion previously. This long-term trend of selling U.S. debt has added to broader worries in global bond markets.
Adding to the uncertainty, some European governments have reportedly discussed using their large U.S. Treasury holdings as leverage during the recent Greenland crisis. Countries like the United Kingdom, Belgium, and Luxembourg collectively hold trillions of dollars in U.S. bonds, highlighting how interconnected global financial markets have become.
The steady selling of U.S. Treasuries, combined with a surge in government debt, has pushed long-term bond yields higher in recent years. The U.S. 30-year yield recently climbed to around 4.90%. At the same time, gold prices have continued their rally, rising above $5,000 as investors look for safer places to park their money.
In the crypto space, fear remains high. The Crypto Fear Index has dropped to a deeply pessimistic reading of 9, signaling extreme fear among traders. Trading activity has also slowed, with CoinMarketCap data showing a 12% drop in volume over the past 24 hours to about $100 billion. Futures open interest has fallen to $96 billion, far below last year’s peak of over $255 billion. This decline suggests traders are reducing leverage, a trend that often puts further pressure on crypto prices in the short term.
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