🌐 Global Market Capitalization: The market continues to experience significant turbulence, with a total market capitalization evaporating by nearly $290 billion in a single week, briefly falling below the $3 trillion mark. After a weekend crash, the market saw a technical rebound on February 2, but overall sentiment remains extremely fragile.
📶 Market Sentiment: The market sentiment is in a state of extreme panic and wait-and-see. Investor confidence has been severely hit, with funds fleeing from high-risk assets like cryptocurrencies to safer assets like the dollar. Derivatives data shows a surge in demand for hedging against downward trends.
💸 Funds and Liquidations
Recent liquidation scale: Since January 31, the cryptocurrency market has triggered liquidations of over $25 billion in leveraged positions. On February 1, the liquidation amount across the network reached as high as $25 billion, affecting 420,000 people.
Deleveraging in the derivatives market: The total amount of open contracts in the market has fallen to its lowest level since April 2025, indicating that traders are significantly reducing their leveraged risk exposure.
Weekend liquidity risk: This crash has once again exposed the structural weaknesses of the cryptocurrency market, especially during weekends when liquidity is thin, making large orders likely to trigger violent price fluctuations and liquidation chain reactions.
🔥 Today's Focus
Technical rebound in the market, but core narrative faces scrutiny: Bitcoin briefly fell below $76,000 on the morning of February 2, then rebounded above $77,700. However, this rebound is more interpreted as a technical correction after overselling rather than a trend reversal. Analysts point out that unlike traditional assets like gold, Bitcoin has recently failed to respond positively to geopolitical risks or a weakening dollar, and its core narratives of 'digital gold' and 'inflation hedge' are facing severe challenges.
Fed's hawkish nominations continue to suppress the market: Former President Trump's nomination of former governor Kevin Walsh as the next Fed chair is a core macro event that triggered this round of market sell-off. The market generally believes Walsh is more hawkish than current chair Powell, raising concerns that he may adopt a more aggressive tightening monetary policy. This has led to market expectations for the timing of interest rate cuts being delayed, increasing the attractiveness of holding income-generating assets like the dollar, thereby withdrawing liquidity from the cryptocurrency market.
Analysts warn of further declines: Alex Thorn, head of Galaxy Digital Research, pointed out that on-chain data, weak key price levels, and macro uncertainties suggest that Bitcoin may continue to weaken in the coming weeks or months. He warned that Bitcoin faces the possibility of further testing the supply gap near $70,000 and even the long-term key support level of $58,000 (200-week moving average).
Intensified capital competition, market 'disfavor': Analysis suggests that the current market faces fierce capital competition from AI-related stocks and the precious metals market. Many funds are shifting their focus to these areas, leaving Bitcoin appearing 'outdated.' This diversion of funds further weakens the buying power in the cryptocurrency market.
📊 Performance of Mainstream Coins
As of February 2, major cryptocurrencies are still in a weak consolidation after a deep correction:
Bitcoin: Price around $77,746.86, down about 40% from the peak in 2025. Weekly decline exceeds 9%, with a cumulative drop of 12.48% in January.
Ethereum: Trading between $2,195.61 and $2,322.01. Down 22.2% over the past week, with a cumulative drop of 17% in January.
Ripple: Price continues to be under pressure, trading around $1.59.
🌟 Sectors and Hot Projects
The market has entered an 'Accumulation Zone': An industry report indicates that some mainstream crypto assets have entered the so-called 'accumulation range' due to significant price declines accompanied by increased trading volume. This typically means that large market participants may be making long-term investments during market weakness.
Assets with significant declines:
Render: Weekly decline of 20.40%.
Filecoin: Weekly decline of 17.55%.
Bonk: Weekly decline of 18.27%.
Dash: Weekly decline of 25.38%.
Story: Weekly decline of 36.91%, the largest drop among higher market cap assets in the report.
Some projects rising against the trend: Amidst a general market decline, HyperLiquid rose over 40% during the week due to trading activity related to the volatile precious metals market.
🌍 Macro and Regulatory Dynamics
Global risk assets resonate with declines: This cryptocurrency crash is not an isolated event, but part of a global wave of selling risk assets. Influenced by the Fed's hawkish expectations, disappointing earnings from AI giants leading to tech stock sell-offs, and the crash in the precious metals market, global markets have entered a 'risk-off mode.'
Increased correlation with traditional markets: Analysis indicates that cryptocurrencies have shown a stronger correlation with traditional risk assets (such as stocks) rather than acting as an independent safe-haven asset. When overall risk appetite declines, cryptocurrencies are sold off.
🐌 Market Insights
On February 2, the cryptocurrency market struggled to find a breather amidst a global macro storm. Although the early morning technical rebound temporarily halted the bloodbath-style decline, the core contradictions in the market remain unresolved: under the expectation of hawkish monetary policy, cryptocurrencies, as high-volatility and high-beta assets, are losing their attractiveness.
The current market adjustment is essentially a result of liquidity retreat, narrative failure, and intensified capital competition. Investors need to recognize that the market may have entered a long phase of trading time for space, digesting floating capital and rebuilding confidence through fluctuations. In the short term, whether the market can stabilize depends on Bitcoin’s ability to effectively recover and hold above $77,000. However, in the medium term, if macro pressures persist, the market may continue to seek solid support downwards. For investors, the more important task now is to manage risk, reduce leverage, and patiently await clear signals of a turn in market structure and macro environment.