🥛 Crypto crash: What happens next 👀

GM. This is Milk Road, the crypto newsletter that holds your hand while the charts do parkour.

Here’s what we’ve got for you today:

✍️ Crypto crash: What happened/what’s next.
🎙️ The Milk Road Show: How Deep Into the Bitcoin Bear Market Are We Now? w/ Julio Moreno.
🍪 BitMine is not going to go bankrupt.

Summ (formerly Crypto Tax Calculator) is a tax software built specifically for crypto. Get started for free with Summ.

Prices as of 2:00 p.m. ET. Trade today with Milk Road Swap.

CRYPTO CRASH: WHAT HAPPENED AND WHAT COMES NEXT? 📉

Between 9-10 a.m. ET on Saturday morning, around $70B in market value vanished from crypto. 👇

Source: @AshCrypto

If you’re in the dark on what happened and what you need to look out for this week, here's a breakdown:

The sell-off was the result of (more) bad news hitting a market already on the edge.

Think of it like a Jenga tower that's been wobbling for weeks.

Someone finally pulled the wrong block.

BTC had already dropped from recent highs to around $84k by January 30th…

Liquidity was paper-thin (i.e. there was lower trading volume, making it easier for large orders to move prices significantly), because it was a Saturday…

Take that, and add:

A partial U.S. government shutdown kicking in.
Trump nominating Kevin Warsh to replace Powell at the Fed (Warsh doesn’t like the idea of turning on the money printer - and money printing floats risk assets).
Explosions at Iran's Bandar Abbas port, with Trump warning about potential military action. 👇

Source: @MilkRoadMacro

As a result, risk-off mode was activated:

BTC broke below $81k, triggering a wall of liquidations….

$1.68B+ in positions got wiped, mostly longs (causing forced selling)…

This forced selling triggered more forced selling, and so on, with the crash essentially feeding itself…

But there was a mistake most people made in their analysis… 👇

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CRYPTO CRASH: WHAT HAPPENED AND WHAT COMES NEXT? (P2) 📉

Most people thought this was about one thing:

"It's Iran."
"It's the Fed."
"It's the shutdown."

No.

It was everything, all at once, into a market with no liquidity to absorb it (think: no traders ready to buy any dips with size).

The reality: Multiple converging pressures fueled it.

Geopolitical fear. Government dysfunction. Hawkish Fed signals. Extreme leverage getting flushed.

As to which events actually caused the sell-off, and which ones simply coincided with the crash? It’s unclear - but hey, that’s investing, baby!

Either way, at the end of it all we had ourselves a broad risk-off event where crypto, being the highest-beta asset (aka: more volatile than the overall market), got hit hardest - with BTC testing and breaking the $80-83k range.

Now, analysts are watching the $74k support line to see if it breaks next.

Source: TradingView

But here's a potential silver lining to this weekend’s vanta black cloud…

When overcrowded positioning gets flushed, it often sets up better entries later.

The fear index just hit its highest negative reading of 2026 (and extreme fear typically marks bottoms).

Source: CoinMarketCap

PLUS: this just happened. 👇

Source: @MilkRoad

The ISM PMI tracks whether U.S. manufacturers are buying more raw materials in expectation of future economic growth, or holding back due to weakening demand.

And not only did we beat expectations - we broke the 50 line, notching the highest ISM PMI print since 2022!

Above 50 indicates economic expansion → below 50 indicates economic contraction.

Or to use a more crypto-centric framing: when the ISM sustains/grows above 50, the crypto market tends to thrive.

(You can get a deeper understanding of the ISM PMI and why our in-house macro genius, Tomas, thinks ISM is actually lagging - here.)

With all of that in mind, here’s what to watch now:

Whether $74k holds as support.
Fed commentary on future rate paths.
ETF flow direction in the coming days.
How quickly the shutdown gets resolved.
Any de-escalation in Middle East tensions.
Next month's ISM print (it will tell us whether this was just a post-holiday material refresh, or the start of a broader uptrend).

This is the kind of environment where fortunes are made and lost.

Stay nimble. Manage your risk.

And remember that 45-minute wipeouts are a feature of this market, not a bug.