Did crypto run too far, too fast?

Perhaps we ran too far, too fast. Hopes for a pro-crypto Trump administration fuelled Bitcoin’s rally to all-time highs, but with no concrete policy follow-through, momentum faded. At the same time, excessive leverage, macro uncertainty, and a string of industry setbacks, including presidential meme coin scams and a record-breaking security breach, created the conditions for a sharp sell-off.

Now, the question is whether we’ve found a true bottom. Many altcoins capitulated in January and February as investors rotated into safer assets like Solana and Bitcoin. But with this latest downturn hitting major caps the hardest, perhaps alts had already found their floor, which could explain why they’re seeing a stronger bounce today.

Bitcoin & the broader sell-off

Bitcoin has taken a sharp 7% hit, dropping to US$86k, officially entering a technical bear market with a 21% decline from its all-time high of US$109k. The broader market is also feeling the pressure, with the S&P 500 closing down 0.47% and the tech-heavy Nasdaq sliding 1.24%. Crypto markets have seen US$1.56B in liquidations over the past 24 hours, with Trump’s trade tariffs alone triggering US$2B in sell pressure on Feb 3rd. Safe to say leverage players have been rinsed.

What’s happening? A classic de-risking event

Markets across the board are in risk-off mode, driven by a combination of macro uncertainty and crypto-specific headwinds. The market is losing its bid, the Saylor affect (market impact of MicroStrategy's aggressive Bitcoin accumulation) is waning and after a month of bad news the market finally cracked.

Key factors driving the sell-off:

• Leverage, macro risk, and security breaches: A combination of excessive leverage, economic uncertainty, and a record-breaking exchange hack has shaken investor confidence.
• Tariff deadlines & macro uncertainty: With Trump’s next round of trade tariffs approaching, investors are reducing exposure to risk assets, including crypto.
• Upcoming US unemployment data: A key economic indicator due next week is keeping markets on edge. Any sign of weakness could reinforce recession fears.
• Lack of a fundamental catalyst: The initial ‘Trump trade’ euphoria has worn off. Without clear policy direction or economic stimulus, markets lack the fuel to push higher.
• Market structure breakdown: Once BTC lost support at US$90K, the move to US$86K accelerated.
• Altcoin capitulation: Solana followed a similar pattern, breaking critical support at US$170 and triggering further downside.

Bitcoin’s technical picture: Support levels & trend watch

Bitcoin is currently down 2.68% intraday, testing a critical support zone at US$86k. Holding this level is essential for maintaining the current market structure. If buyers step in, we could be seeing the bottom, or at least a temporary relief bounce. If not, we risk further downside.

Both the CNN and the Crypto Fear & Greed Index has dropped to Extreme Fear, a clear sign that sentiment is shaken. Historically, this has been where long-term investors start accumulating, but in the short term, volatility remains elevated.

Is this the bottom or just a dead cat bounce?

This correction doesn’t necessarily mark the end of the bull market, but it is a reality check. Confidence has been shaken, and the market’s volatility serves as a reminder that it can take everything in an instant. Looking ahead, macro factors will be key. With crypto-native catalysts largely exhausted, the market is now watching for signs of easing trade tensions or a shift toward looser monetary policy. Despite the recent turmoil, the bull case for crypto remains intact, institutions are still buying, and regulatory clarity continues to improve.

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