Market risk appetite has noticeably weakened! In the early hours of February 4th, Beijing time, the three major U.S. stock indices collectively declined, with the Nasdaq Composite dropping over 1%. Technology stocks experienced a broad sell-off, with Micron Technology falling more than 4%, and NVIDIA and Microsoft each declining nearly 3%. The cryptocurrency market, known for its higher speculative nature, also witnessed another sharp downturn. Bitcoin plummeted as much as 7% intraday, breaching the $73,000 level. At the time of writing, Bitcoin and Ethereum were down nearly 4%, while Solana fell over 5%. Data from Coinglass revealed that over the past 24 hours, more than $700 million in cryptocurrency futures contracts were liquidated across the market, affecting a staggering 169,800 traders.
U.S. mega-cap tech stocks underwent a collective correction on Tuesday. The three major U.S. stock indices saw significant declines, with the Nasdaq's intraday drop exceeding 2% at one point, the S&P 500 falling over 1.6%, and the Dow Jones Industrial Average also down more than 1%. By the close, the Nasdaq had declined 1.43%, the S&P 500 was down 0.83%, and the Dow had slipped 0.34%. Most major U.S. technology stocks finished lower, with the Wind US Tech Seven Giants Index falling 1.62%. On an individual stock basis, NVIDIA and Microsoft each dropped nearly 3%, Meta Platforms fell over 2%, Amazon declined nearly 2%, Alphabet dropped over 1%, Apple edged down 0.2%, while Tesla registered a marginal gain of 0.04%. Among other stocks, Micron Technology fell more than 4%, while Oracle and Qualcomm each dropped over 3%. Additionally, software stocks continued their downward trend, with ServiceNow plunging 7% and Salesforce.com declining 6.85%.
NVIDIA CEO Jensen Huang on Tuesday refuted rumors of complications in the deal with OpenAI. In a media interview, he explicitly stated that the company's plan to invest in OpenAI is still "proceeding as scheduled," denying recent market speculation about tensions between the two parties. He emphasized, "There is absolutely no controversy; these claims are completely unfounded... There is no drama whatsoever, everything is moving forward as planned... We are very happy to partner with OpenAI." Huang further confirmed that NVIDIA will participate in OpenAI's next funding round, which he described as potentially the "largest private financing round in history."
Josh Brown, CEO of Ritholtz Wealth Management, commented, "I think we see this type of market action once or twice a year. The catalysts are always different, but the outcome is often similar – the most popular trades from the preceding rally get completely hammered. Risk appetite is being withdrawn from all areas related to technology."
Currently, U.S. policy uncertainty remains elevated. The U.S. Bureau of Labor Statistics announced that the nonfarm payrolls report, originally scheduled for release on Friday, would be postponed due to a partial government shutdown. Emily Liddel, Deputy Commissioner of the BLS, stated in a declaration, "The Employment Situation report for January 2026 will not be released as scheduled on Friday, February 6th. The report will be rescheduled for release after government funding is restored." It is presently unclear whether the U.S. Department of Commerce will face reporting delays due to the Washington impasse. This decision comes during a week packed with economic data releases, which was originally supposed to culminate with the nonfarm payrolls report.
According to the CME FedWatch Tool, the probability of a 25-basis-point rate cut by the Fed in March is 8.9%, while the likelihood of rates remaining unchanged is 91.1%. The cumulative probability of a 25-basis-point cut by April is 22.5%, with a 76.0% chance of unchanged rates and a 1.5% probability of a cumulative 50-basis-point cut. By June, the cumulative probability of a 25-basis-point cut stands at 46%.
Cryptocurrencies experienced a broad sell-off, with nearly 170,000 traders facing liquidations. As market risk appetite waned, the cryptocurrency market plunged once again. At the time of writing, Bitcoin was down 3.78% to $75,800, Ethereum had fallen 3.88% to $2,260, Solana dropped over 5%, XRP declined nearly 2%, while BNB and Cardano each fell over 1%. Bitcoin, the largest cryptocurrency by market value, extended its downward trend from the past four months. On Tuesday, Bitcoin fell as much as 7% to $72,877, its lowest level since November 6, 2024, before recovering to around $76,000 by 3:35 PM New York time. Year-to-date, Bitcoin's cumulative decline has approached 14%.
Data from Coinglass shows that in the past 24 hours, over $741 million in cryptocurrency futures contracts were liquidated across the entire market, affecting 169,800 traders. Of this, long position liquidations accounted for $538 million, while short position liquidations totaled $203 million. The largest single liquidation order occurred on HTX-ETH-USDT, valued at $8.4038 million.
Bohan Jiang, Senior Derivatives Trader at FalconX, noted, "Many traders attempted to buy the dip, betting Bitcoin could rebound above $80,000. However, as Bitcoin continued to trend lower, a significant number of these positions were forced to close, exerting further downward pressure on the price." Bloomberg pointed out that despite a friendly stance from the White House towards crypto and rapidly increasing institutional adoption, Bitcoin has plummeted approximately 40% since surging to its all-time high in early October last year.
This sharp decline originated from a severe cascade of liquidations triggered by additional comments from former President Trump about tariffs on October 10th last year, which wiped out $19 billion in leveraged token bets across the crypto market in a single day, from which it has yet to recover. Bitcoin's latest drop coincides with intense volatility across broader markets, particularly following a historic plunge in precious metals over the weekend after a stunning rally. On Tuesday, the S&P 500 retreated from near record highs under selling pressure in tech stocks, while gold and silver rebounded, and oil prices surged amid rising geopolitical risks.
For Bitcoin, the crypto derivatives market suggests potential for further weakness ahead, with a noticeable lack of clear positive catalysts currently. Augustine Fan, Partner at cryptocurrency options platform SignalPlus, stated, "Sentiment in the cryptocurrency market has hit rock bottom. After more than a year of declining volatility, it has finally picked up as traders scramble for protection. The market is in a bearish phase, with the all-time high now a distant memory." While some institutional holders remain steadfast, retail participation is waning as large long-term Bitcoin holders sell off assets worth tens of billions of dollars.
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