SKN | Cryptos Crumble as Bitcoin Falls Below $66,000 and Friday’s Relief Rally Fades

Key Points:

• Bitcoin has slipped back below $66,000 as last week’s near-20% rebound unravels.

• Stronger U.S. jobs data has reduced expectations for near-term Federal Reserve rate cuts, pressuring risk assets.

• Futures open interest and trading volumes show declining investor participation as capital rotates into other rallying markets.

Crypto markets are back under pressure after last week’s sharp rebound proved short-lived. Bitcoin slid below $66,000 in mid-morning U.S. trading, reversing much of Friday’s nearly 20% surge that followed a capitulation-style drop to $60,000. The renewed weakness is reinforcing concerns that the bounce was merely a bear-market relief rally rather than the start of a sustained recovery.

Bitcoin was trading near $65,989 at publication, down more than 4% over the past 24 hours. Ether hovered near $1,914, down roughly 5.5%, while Solana fell to around $78 and XRP dropped about 3.5%. The synchronized decline underscores broad-based weakness across major digital assets.

Strong Jobs Data Undermines Rate-Cut Hopes

The latest leg lower followed a stronger-than-expected U.S. employment report. January payrolls rose by 130,000, nearly double economist forecasts, while the unemployment rate unexpectedly dipped to 4.3%. The data prompted interest-rate traders to scale back expectations for imminent easing by the Federal Reserve.

According to CME FedWatch data, markets are now pricing in just a 6% probability of a March rate cut and a 23% chance in April, down sharply from prior expectations of 21% and 52%, respectively. While fading rate-cut hopes have weighed on risk assets broadly, crypto’s downturn predates the shift. The sector began sliding in late 2025 even as the Fed delivered three consecutive rate cuts, suggesting macro policy alone does not explain the bear phase.

Gold and silver, by contrast, are higher on the day, up 0.8% and 3.2%, respectively. U.S. equities have returned to roughly flat after earlier gains, highlighting crypto’s relative underperformance.

Hard Data Shows Retreat in Conviction

Derivatives data points to declining engagement. Analytics firm CoinGlass reported that bitcoin perpetual futures open interest has fallen to 51% below its October 2025 peak, signaling a sharp reduction in leveraged positioning and trader conviction.

The contraction in open interest indicates that both speculative appetite and directional confidence have weakened. In previous cycles, similar drops in leverage accompanied extended consolidation periods rather than immediate recoveries.

Retail participation also appears to be fading. In South Korea, where retail trading activity has historically driven crypto momentum, Bloomberg reported that investors are rotating out of digital assets and into equities as the Kospi index hits record highs. Monthly trading volume on the Kospi rose 221% year-over-year, while crypto exchange volumes in the country fell approximately 65%.

The pattern suggests not panic-driven liquidation but gradual disengagement — a dynamic that can prolong bear markets as liquidity thins and rallies struggle to gain traction.

Crypto-Linked Stocks Extend Losses

The weakness is spreading across crypto-related equities. Robinhood fell 12.5% after reporting a sharp drop in fourth-quarter crypto trading revenue, dragging down Coinbase, which slipped 7% ahead of earnings. Bitcoin treasury firm Strategy declined 4.5%, while ether-focused treasury company Bitmine Immersion dropped 3.8%.

Other sector names were similarly pressured. Circle fell 4.7%, Galaxy Digital slid 3.2%, and Bullish declined 5.3%.
The coordinated pullback across both tokens and equities reflects a broader retreat in risk appetite toward the sector.

A Market Searching for Narrative

Crypto has historically been fueled by powerful narratives, from institutional adoption to halving cycles and ETF approvals. At present, however, those stories appear to have lost urgency. With equities, commodities, and select international markets in rally mode, investors seem willing to deploy capital elsewhere.

The critical level now remains the $60,000 area for bitcoin. If that floor holds, the market may enter a protracted consolidation. If not, the absence of strong participation and thin liquidity could accelerate another wave of downside volatility.
For now, Friday’s rebound looks increasingly like a temporary pause in a broader downtrend, as investor attention drifts toward markets offering clearer momentum.