Crypto Market Tumbles: What’s Driving the February 4, 2026 Sell-Off?

Crypto markets are bleeding red today. A sharp, broad-based correction has investors scrambling for answers—and exits.

The Macro Squeeze

Global risk assets are under pressure. Traders point to hawkish whispers from central banks and a stronger-than-expected jobs report as the primary catalysts. The narrative of 'higher for longer' interest rates is back, sucking liquidity from speculative corners. When traditional finance tightens its belt, crypto often feels the pinch first.

Technical Breaks Trigger Algos

Key support levels cracked overnight. Bitcoin's slide below the psychologically important $XX,XXX mark—a level it had defended for weeks—unleashed a cascade of automated selling. Ethereum and major altcoins followed, with losses accelerating as stop-loss orders clustered around those technical zones. It's a classic case of machines reading other machines' panic.

Regulatory Headwinds Gain Force

News didn't help sentiment. A draft proposal from a major financial authority, suggesting stricter capital requirements for digital asset exposures at banks, hit the wires. While not law, it was enough to spook institutional players sitting on the fence. The old guard still views crypto as a risk to be managed, not an opportunity to be embraced—a perspective that always surfaces during downturns.

Is This a Healthy Reset?

Volatility is the price of admission. This pullback, while painful, flushes out excess leverage and resets overextended valuations. The core theses—digital scarcity, decentralized infrastructure, programmable money—remain intact. Bull markets are built on fear, greed, and the occasional 20% haircut that separates tourists from residents.

Remember, Wall Street analysts have been wrong about crypto more times than a trader forgetting their exchange password. Today's fear is tomorrow's buying opportunity. The cycle continues.

Crypto Winners & Losers

On Wednesday morning (UTC), 7 of the top 10 coins per market capitalisation have seen their prices drop.

dropped by 2.9%, now changing hands at $76,415. This is the second-highest decrease in the category.

is up 4.3%, now trading hands at $2,318. This is the second-highest rise in the category.

The biggest drop on this list is 6.5% by, standing at $97.8.

At the same time, three coins posted increases and only one of these above 0.5%.is up 1.1%, changing hands at $0.2865.

andappreciated 0.3% and 0.2% to $0.1083 and $1.04, respectively.

Furthermore, of the top 100 coins per market cap, 64 have posted price drops today.

One of these saw a double-digit fall:is down 10.5% to $33.33.

follows with a 9.7% drop to the price of $0.01941.

At the same time,andare the best performers among the green coins. They’re up 4.4% and 3.5% to $2.09 and $5,106, respectively.

Meanwhile, Michael Burry, the investor behind ‘The Big Short’, argued that Bitcoin’s ongoing falls could trigger a $1 billion sell-off in gold and silver.

“It looks like up to $1 billion in precious metals were liquidated at month’s very end as a result of falling crypto prices,” Burry said. The crypto-precious metals correlation has created “sickening scenarios,” he added.

BITCOIN SLIDE COULD WIPE OUT COMPANIES

Michael Burry warned that Bitcoin’s ongoing decline could destroy significant value, especially for companies holding large BTC reserves. He said bitcoin has failed as a safe haven like gold and could push aggressive corporate holders into…

‘Time Compressed Rather Than Trend Resolved’

Tony Severino, market analyst at, commented that “across markets, the common theme this week is not direction, but compression,” Severino concludes.

“Currency volatility is rising even as the dollar softens, metals are holding extreme levels without breaking, and Bitcoin remains locked in one of the tightest volatility regimes in its history,” he writes. “These conditions tend to frustrate short-term participants, but they also signal that markets are working off time rather than trend.”

“For crypto investors, this is a phase that rewards discipline over prediction. Macro forces are shifting beneath the surface, and technical structures across assets suggest that resolution is approaching – even if timing remains uncertain. When volatility expands from these conditions, history suggests the MOVE is unlikely to be subtle. Until then, patience, positioning, and risk management remain the real edge.”

Severino explains that BTC remains locked in a tightening range. However, there is a “more important signal” emerging on the monthly timeframe.

“Bollinger Bands on the monthly chart are the tightest they have ever been, reflecting an extreme level of volatility compression,” Severino says. Also, BTC still trades below the monthly basis line.

Per the analyst, sustained closes below the monthly Bollinger basis often precede “capitulation-style moves in the months that follow.”

“This does not guarantee immediate downside, but it reinforces the idea that time is being compressed rather than trend resolved. When volatility finally expands from these conditions, the resulting move has tended to be decisive – and markets rarely give ample warning once that expansion begins.”

Aftermoved its entire 4,710 BTC treasury to an exchange this week, showcasing unrealised losses. A liquidation hasn’t been confirmed, Severino says, but “the move alone was enough to spark market speculation, underscoring how sensitive sentiment remains around corporate-held Bitcoin.”

Meanwhile, altcoins lag Bitcoin, with total market cap measures struggling to reclaim former support levels. “Technically, this reflects caution rather than capitulation, as many altcoins remain range-bound with declining volatility.”

That said, early rotation is beginning to appear, he adds. Higher-quality LAYER 1s, Layer 2s, and infrastructure-focused tokens display improving relative strength against the broader altcoin complex.

Levels & Events to Watch Next

At the time of writing on Wednesday morning, BTC was trading at $76,415. It started the day with its intraday high of $78,902. It then briefly dipped to the daily low of $73,111 before recovering to the current level.

Over the past week, the coin’s price decreased by 14.2%. It moved between $73,111 and $90,117.

An inability to hold the current level WOULD lead to a drop towards $73,000. After this, it could revisit the $71,200 and $70,050 zones, potentially dipping into the $69,000 territory.

At the same time, ethereum was changing hands at $2,281. Similarly to BTC, ETH saw higher prices earlier in the day, posting the day’s high of $2,326. It then plunged to the intraday low of $2,117 before jumping to $2,324 and correcting downwards.

Additionally, ETH fell 24.2% in the past seven days. It traded in the $2,120–$3,034 range.

If the pullback continues, ETH will revisit the $2,100 level, followed by $2,030, and $1,950.

Moreover, the crypto market sentiment pushed even further into the extreme fear zone with the latest fall.

The crypto fear and greed index stands at 14 today, compared to 17 we saw at the same time yesterday. This is the lowest level since late November 2025.

Sentiment reflects the market instability and volatility, as well as increasing general uncertainty. Yesterday’s minor increase in prices did nothing to abate fear among market participants.

ETFs Post Mixed Picture

While it started the week with positive flows, the US BTC spot exchange-traded funds (ETFs) shifted back into the red on Tuesday, posting $272.02 million in outflows. The total net inflow pulled back to $55.3 billion.

Of the twelve ETFs, one posted positive flows, and seven saw outflows.took in $60.03 million on 3 February.

On the other hand,posted the highest amount of negative flows with in $148.7 million. It’s followed by$62.5 million.

However, the US ETH ETFs broke the brief red streak with minor inflows of $14.06 million on Tuesday. The total net inflow climbed slightly to $11.99 billion.

Of the nine ETH ETFs, four posted inflows and two recorded outflows.is at the top of the green list with $42.85 million in positive flows.follows with $19.12 million.

At the same time,let go of $54.84 million, followed by$2.47 million in negative flows.

Meanwhile, Cathie Wood’skept buying during the market downturn. Its ETFs bought some $3.25 million of, as well as $2.4 million of Circle Internet Group, according to a filing. Moreover, Ark bought about $3.5 million ofand $630,606 of.

Speaking of which,chairman Tom Lee pushed back on criticism of the company’s Ethereum treasury strategy. Comments accused the company of sitting on unrealised losses and forming future selling pressure.

Lee, however, responded that paper losses are typical when a public vehicle is built to mirror the ETH price through a full market cycle. The company’s aim is to outperform over time and not try to smooth out drawdowns.

These tweets miss the point of an ethereum treasury:
– BitMine is designed to track the price of $ETH
– outperform over the cycle (think up ETH)
– crypto is in a downturn, so naturally ETH is down$BMNR will see “unrealized” losses on our holdings of ETH during these times:
-… https://t.co/VpoNjAnJdC

Quick FAQ

The crypto market recorded a pullback over the past 24 hours. Also, following a sharp increase, the US stock market closed the Tuesday session with a drop. By the end of trading on 3 February, thewas down 0.84%, thedecreased by 1.55%, and thefell by 0.34%.

In the absence of a firm foothold that would allow the market to recover, the prices are likely to trend downwards. Based on current signals, the price decreases will continue, at least in the short term.