At current market conditions, crypto and Bitcoin traders are high on “hopium.” The thing is, there is nothing they can do. The Bitcoin price appears to be heading in one direction only: southward. Before last week, when real cracks began to emerge, there was confidence that the BTC USD price would hold above $80,000 and track higher.
However, looking at prevailing market conditions, it is evident that bears are unyielding. If the 2021 highs are lost, fear could set in and drag the entire market with it. Already, even top meme coins are bleeding value first, while some of the best cryptos to buy print red, extending losses from Q4 2025 lows.
There are multiple triggers that may explain the sell-off of February 3, which saw the BTC USD price drop below $73,000, forcing prices below November lows. Fears of a “hawkish” year are one factor, but at the moment, eyes are on the fragile US credit markets, specifically, the ICE BofA US Corporate Option-Adjusted Spread, which tracks that fear.
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Eyes on The US Credit Market: Tight Spread, Why is BTC USD Falling?
Yesterday, the US credit markets appeared to have “flashed” a warning, causing panic, which sent BTC to as low as $72,000 before recovering. Interestingly, this is happening while corporate bond risk is still at near-historic lows. That mismatch has traders watching one question closely: When will real credit stress finally show up?
In a healthy market, investors usually demand a higher premium to hold risky corporate debt over safe government bonds. Right now, the ICE BofA US Corporate Option-Adjusted Spread is compressed, standing at 0.74%, the lowest since 1997.
IG yield spread within a bp of fresh cycle lows.. 74bps currently. FRED pic.twitter.com/8iWKtUICfY
— Mike Zaccardi, CFA, CMT 🍖 (@MikeZaccardi) February 2, 2026
Usually, when the spread increases, for example, jumping from 0.74% to 1.5%, it means investors are worried that companies might default. Subsequently, they sell “risky” digital assets and move into “safe” Treasuries. Because Bitcoin and top cryptos are treated as “high-beta” risk assets, they are often the first thing sold when this panic starts. When investors begin de-risking, they pull liquidity from crypto to cover losses elsewhere.
(Source: FRED)
However, there is something odd at the moment. The spread is tight, at 0.74%, suggesting that the credit market in the US is unusually calm and confident. Because of this, you would expect high-beta assets like Bitcoin to thrive because confidence is high and credit spreads are low. Instead, Bitcoin is taking a beating.
This divergence is why there is reason to believe the credit market is underpricing risk. If credit spreads suddenly “snap” wider, catching up with the reality of high rates in 2026, Bitcoin could collapse further.
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What’s Next for Bitcoin? Time to Buy?
Nonetheless, history shows that Bitcoin bottoms form only after those spreads widen, often three to six months later. Calm credit, as it is at the moment, often comes before the storm. In past Bitcoin cycles, the price stopped falling only after credit markets cracked first, not before. Keeping this in mind, traders should be cautious.
US debt just hit $38.5T, and the 10-year Treasury yield sits around 4.29%, a level that tightens money across the system. In 2018, 2020, and 2022, Bitcoin did not bottom on the first wave of fear. It bottomed after credit markets cracked and liquidity dried up. That delay burned impatient buyers.
(Source: FRED)
This pattern may be printing once more. High debt and rising yields squeeze cash. When lenders finally demand higher compensation, risk assets reprice fast. Bitcoin tends to find stronger buyers only after that pain becomes visible. This lines up with broader bitcoin market stress seen during recent pullbacks tied to tighter financial conditions.
Presently, short-term pressure remains real. The good news is that profit-taking is fading. On-chain data shows that the Bitcoin Spent Output Profit Ratio (SOPR) fell toward 1, its lowest level in a year.
(Source: Bitbo)
That means sellers have stopped locking in gains and are starting to hesitate. This pattern often appears near accumulation zones, not the final bottom.
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