Binance Research has issued a detailed report revealing that the recent massive sell-off in the crypto sector, which pushed Bitcoin to its lowest levels since November 2024, is a result of an investor overreaction. Analysts from the firm indicate that the panic was triggered by the nomination of Kevin Warsh to chair the Federal Reserve, which the market misinterpreted as the beginning of an aggressive and unsustainable liquidity tightening under current conditions.
The technical context suggests that cryptocurrencies acted as assets of last resort in a liquidity chain pressured by geopolitical tensions and disappointing tech sector earnings. However, Binance underlines that there are physical constraints in the financial system—for example, the depletion of reverse repo facilities—that would make a drastic reduction of the Fed’s balance sheet difficult without risking a banking crisis similar to the one seen in 2019.
In the coming days, investors should watch for potential changes in banking regulations that would allow the system to absorb Treasury debt before validating a severe tightening scenario. The resolution of the U.S. government shutdown on February 3 is emerging as an overlooked positive factor that could stabilize sentiment. For now, the market must observe whether Bitcoin recovers key technical supports after hitting intraday lows near $73,000.
Source:https://www.binance.com/en/research/analysis/weekly-market-commentary-2026-02-05
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