Bitcoin’s recent drop to $60,000 on February 6 has raised significant concerns among investors, marking what on-chain analyst Darkfost describes as a capitulation event. This sharp decline triggered an influx of Bitcoin into exchanges, driven primarily by short-term holders and smaller wallets, often referred to as "shrimps." Darkfost noted that it wasn't just retail panic pushing these flows; rather, professional trading platforms also saw notable activity. This selloff reignited anxieties among investors, especially as Bitcoin hit price levels not observed since October 2024, amid a broader downturn exceeding 50% from its all-time high.

The speed of Bitcoin's correction played a crucial role in increasing market volatility. According to Darkfost, the rapid decline fostered a fear-driven environment that led many investors to rush their assets onto exchanges, further fueling the liquidation fire. He pointed out that short-term holders were particularly quick to react, with Binance seeing significant inflows. On February 6 alone, more than 100,000 BTC were deposited by short-term holders on Binance, surpassing levels seen during the April 2025 correction. Overall, from February 4 to February 6, nearly 241,000 BTC flowed into various exchanges, indicating substantial selling pressure.

Interestingly, while Binance usually captures a large portion of retail-driven inflows, Darkfost also highlighted a concurrent spike in activity on Coinbase Advanced, a platform favored by institutions and active traders. On the same day, BTC inflows on Coinbase surged to approximately 27,000 BTC, suggesting that the panic was not confined to retail investors alone. Darkfost's observations illustrate that nervousness was widespread, affecting both retail and institutional players alike.

In a separate analysis focusing on smaller holders, Darkfost noted that retail involvement had been relatively muted throughout much of the cycle, only to resurface dramatically during the recent price drop. He examined inflows from wallets holding less than 1 BTC, the so-called "shrimps," which typically react quickly to market changes. On February 5, shrimp inflows to Binance exceeded 1,000 BTC in a single day, a stark increase compared to the monthly average of around 365 BTC. This spike in activity mirrored trends seen in July 2025, albeit under a very different market atmosphere.

Darkfost linked these movements to cost-basis dynamics that have increasingly pressured coin holders as the market correction deepened. He indicated that Bitcoin has placed significant stress on short-term holders and is now beginning to test long-term holders. As of now, the first cohorts of long-term holders, those who have held their coins for 6 to 12 months and 12 to 18 months, find themselves underwater with cost bases of $103,188 and $85,849, respectively. These figures highlight the growing strain on even those who typically weather market volatility.

Highlighting further complexity, Darkfost pointed out that the price reached the realized price of the 18-month to 2-year cohort at $63,654, an area he deemed significant for these holders. He also observed that rising cost bases suggest that higher-cost coins are now aging into the long-term holder category. In his view, the recent market dynamics represent an exhaustion flush, indicating that it may take time for the market to stabilize and absorb the recent influx of Bitcoin.

After briefly falling below $60,000, Bitcoin has since rebounded and was trading around $71,000. Darkfost noted that this stabilization coincided with retail flows returning to average levels, effectively alleviating one of the primary sources of selling pressure. However, the critical question remains: was this merely a temporary low, or just a pause in what could be a prolonged high-volatility regime? As it stands, Bitcoin is trading at $69,525, leaving many investors to ponder the future direction of the market amidst ongoing uncertainty.