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Bitcoin’s Latest Drop Signals Halfway Point of Bear Market

Derivatives

Ethereum

Hyperliquid

Liquidity

Macro

Stablecoin

Written by Laurens Fraussen

09/02/2026

    Welcome to the Data Debrief!

    Welcome back to the Data Debrief! 

    Last week’s correction triggered approximately $9 billion in liquidations and pushed stablecoin dominance above 10%, exceeding levels last seen during the FTX collapse.


    • BTC’s 52% drawdown aligns with historical post-peak patterns

    • $9B in liquidations and 55% open interest reduction signal forced deleveraging

    • Hyperliquid and Canton maintain relative strength as altcoins approach 2023 lows

    Bitcoin’s Latest Drop Signals Halfway Point of Bear Market

    As volatility continues through 2026, Bitcoin has experienced sustained selling pressure through late January and early February, declining from $90,000 to test $60,000 in an intraday capitulation move, before recovering to current levels around $70,000. This 32% correction, combined with deteriorating macro conditions and Fed leadership transition uncertainty, now represents the most significant drawdown since the 2024 halving for BTC. Analysis of on-chain metrics, and comparative performance across tokens reveals a market approaching critical technical support levels that will determine whether the four-year cycle framework remains intact.

    Stablecoin dominance has surged to approximately 10.3% of total crypto market cap, exceeding Q4 2022 levels during the FTX collapse aftermath. This metric has increased dramatically as BTC’s decline to $60,000 reduced total market cap while stablecoin supply has remained stable.

    The current trajectory shows an accelerating rotation into stablecoins, with approximately $22B in net flows over the past three weeks. The speed of dominance increase now mirrors 2022 patterns, though the composition differs – current flows represent both price-driven market cap reduction and active conversion to stables, indicating anticipatory positioning that has proven prescient.

    Historically, stablecoin dominance peaks have coincided with cycle bottoms, as capital accumulates in stables before rotating back into risk assets. The 2022 peak reached 11.5% before reversing as markets bottomed in Q4 2022. Current levels at 10.3% suggest we’re approaching, but may not have reached, maximum defensive positioning. The key signal to monitor is stabilization or decline in stablecoin dominance, which would indicate capital beginning to redeploy, a prerequisite for sustained recovery. However, dominance can remain elevated for months during bear markets, meaning high readings alone don’t signal an imminent bottom.

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    Data Used In This Analysis

    Our industry-leading research is the direct result of combining our proprietary data with world-class in-house experts. Bringing the very best of Kaiko’s people and data together, we unlock the unique insights that form the basis for our discoveries and analysis. We believe in doing so, our data speaks for itself, helping both our clients and the wider industry get a better understanding of the crypto ecosystem, and the evolving trends and patterns in motion at a regional and global scale.

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