Week in Markets: The Week Crypto Broke

The week crypto broke. Bitcoin flash crashed to $60,000. The largest liquidation event since FTX wiped $2.6 billion in positions. Fear & Greed hit 9, the lowest since the Luna collapse. Gold bounced. Equities survived. Crypto did not.

Last week we noted BTC was clinging to $74K support. That level shattered on Wednesday as forced deleveraging, geopolitical escalation, and a government shutdown data blackout combined into a perfect storm.

Macro Pulse

The Government Shutdown

A partial government shutdown began at midnight on Friday, January 31 when the House delayed a funding vote. It lasted less than four days, ending Tuesday, February 3 when Congress passed a spending package.

The shutdown had one critical consequence: the Bureau of Labor Statistics delayed the January NFP jobs report, originally scheduled for Friday, February 6. The new release date is Wednesday, February 11. The January CPI report was also pushed back, from February 11 to Friday, February 13.

Markets were left flying blind on the labor market at exactly the wrong time.

Challenger Report: Layoffs Surge

Without NFP, the Challenger, Gray & Christmas report filled the data void with alarming numbers.

January layoffs: 108,435 (highest January since 2009). Hiring intentions: lowest since 2009.

ISM Services: Still Expanding

ISM Services PMI came in at 53.8 in January, beating expectations of 53.5.

Business Activity Index: 57.4 (highest since December 2024). Employment: expanded for 2nd consecutive month. New Export Orders: collapsed to 45.0 from 54.2.

The export orders plunge is directly linked to tariff effects. The effective US tariff rate hit 13.5%, highest since 1946 according to the Penn Wharton Budget Model.

Central Banks: Divergence

Three central bank decisions this week revealed a world moving in conflicting directions.

RBA (Tuesday, February 3): HIKE to 3.85%. Australia hiked for the first time since November 2023. Inflation picked up materially in H2 2025, running above the 2-3% target band. Unanimous vote. This makes the RBA the first major central bank to reverse from cuts back to hikes in this cycle.

ECB (Thursday, February 5): HOLD. The ECB held all three key rates unchanged for the fifth consecutive meeting. Main refinancing at 2.15%, deposit facility at 2.0%.

BoE (Thursday, February 5): HOLD at 3.75%. The surprise was the vote split. The MPC voted 5-4 to hold, with four members preferring a 25bps cut to 3.5%. Markets expected a clearer 7-2 vote. Governor Bailey said he sees "scope for some further easing."

Sources - Macro Pulse: BLS CPI Release Schedule | CNBC: January jobs report delayed | CNBC: Layoffs highest since 2009 | ISM: Services PMI at 53.8% | RBA Statement February 2026 | ECB Monetary Policy Decision | BoE: Bank Rate maintained at 3.75% | Penn Wharton: Effective Tariff Rates

Geopolitics

US-Iran: Strait of Hormuz Incidents

Two military incidents on Monday, February 3 raised tensions. Three pairs of IRGC gunboats approached the US-flagged tanker Stena Imperative in the Strait of Hormuz. The tanker increased speed and was escorted out by USS McFaul. A US Marine F-35C shot down an Iranian Shahed-139 drone approaching the carrier USS Abraham Lincoln.

By Thursday, Iran seized two foreign oil tankers near Farsi Island and deployed a Khorramshahr-4 long-range missile in a display of force. The US responded with new sanctions on 14 Iranian oil tankers.

US-India Trade Deal

On Sunday, February 2, Trump announced a major trade deal with India. Modi committed to stop buying Russian oil in exchange for tariff reduction from 50% to 18%. India pledged $500+ billion in US energy, technology, and agricultural purchases.

India's Nifty 50 surged 2.5% on Monday.

US Critical Minerals Alliance

On Wednesday, February 4, Secretary of State Rubio launched the "Forum on Resource Geostrategic Engagement" (FORGE) in Washington. 54 countries attended. The initiative includes coordinated price floors for critical minerals and a $12 billion strategic reserve (Project Vault).

The target is China's dominance: 67% of critical mineral output, 90% of processing. Copper, lithium, rare earths, and cobalt sectors will be affected.

Russia Resumes Ukraine Energy Strikes

Russia launched 450 drones and 71 missiles at Ukraine's energy infrastructure on the night of February 2-3, the largest aerial assault of 2026. 1,170+ buildings in Kyiv lost heating. A Kharkiv power plant was damaged beyond repair, leaving 300,000 without electricity.

Starlink Blockade

SpaceX restricted Starlink terminals in Ukraine to a whitelist of approved Ukrainian military users, cutting off Russian forces using unauthorized terminals. Ukrainian officials reported Russian "command and control collapsed" and "assault operations halted in many areas."

Sources - Geopolitics: USNI News: F-35C Downs Iranian Drone | CNBC: Trump India trade deal | Al Jazeera: US Critical Minerals Alliance | CNN: Russia resumes strikes on Ukraine | CNN: Starlink terminals cut off

Markets Overview

US Indices

The week was a rollercoaster. A brutal midweek selloff was rescued by a strong Friday rally.

The Dow briefly eclipsed 50,000 for the first time ever. Small caps (Russell 2000) outperformed large caps by a wide margin on Friday. The rotation away from mega-cap tech accelerated.

Earnings: The AI Capex Question

Two Magnificent Seven reported. Both beat on revenue. Both spooked the market with capex guidance.

Alphabet (GOOGL), Wednesday, February 4: EPS $2.82 (vs $2.61 expected), Revenue $113.8B (vs $111.4B). Google Cloud +48%. YouTube Ads +9% (miss). Stock initially dropped 7% on the capex guidance: $175-185 billion for 2026, more than double the 2025 spend.

Amazon (AMZN), Thursday, February 5: EPS $1.95 (vs $1.97), Revenue $213.4B (vs $211.3B). AWS growth +24%. AMZN fell 12% post-earnings. Capex guidance of roughly $200 billion for 2026. Combined with Google, that is $375-385 billion in 2026 AI spending from just two companies.

AMD dropped 17% after earnings despite beating estimates. China revenue collapsed from $390M to $100M quarter-over-quarter. Eli Lilly was the counter-example, jumping 8% on revenue growth of 43% driven by GLP-1 demand.

Commodities

Gold: ~$5,034 (recovering). From the $4,811 low last week, it climbed back above $5,000. JPMorgan targets $6,300, Goldman $5,400, UBS $6,200. China's central bank extended gold purchases for the 15th consecutive month.

Silver: ~$81.59 (still fragile). Roughly 40% below its January 29 peak of $121. Stabilized in the $78-$82 range.

Oil: WTI ~$63.55, Brent ~$68.05 (flat). Essentially unchanged despite the Iran incidents.

Sources - Markets: CNBC: Alphabet earnings | CNBC: Amazon earnings | CNBC: AMD stock sinks 17% | CNBC: Eli Lilly earnings | Trading Economics: Gold | Trading Economics: DXY

Crypto Landscape

Price Action

Bitcoin flash crashed to $60,062 on Thursday evening, its lowest level since before the Trump election rally. The crash erased all post-election gains. BTC dropped nearly 50% from its October 2025 high of roughly $126,000. This was the steepest single-day decline since the FTX collapse in November 2022.

The bounce was equally violent. BTC rebounded from $60K to $68K within hours on Friday before stabilizing near $71K over the weekend.

ETF Flows: The Exodus

February 2 saw +$562M in inflows (brief reversal). February 3 saw -$272M (reversal reversed). Cumulative since November 2025: -$6.18B. BlackRock's IBIT was the only major fund to attract inflows on February 3 (+$60M) while Fidelity's FBTC bled $149M.

Average ETF holder cost basis remains at roughly $84,099. With BTC at $71K, the average holder is sitting at a -17% loss.

Derivatives (Centralized Exchange Data)

Liquidations (Feb 5): $2.6B+, with ~$2.1B in longs liquidated (80%+). BTC Open Interest dropped 42%. Funding rates turned negative on February 2-3, meaning shorts were paying longs, a clear bearish signal.

On-Chain (Blockchain Data)

Exchange balances: 1.8M BTC (lowest since 2017). Normally a bullish signal. But whales dumped roughly 89,000 BTC between mid-January and early February. Spot volume fell to its lowest level since November 2023.

Sentiment

Fear & Greed Index: 9 (Extreme Fear). Matching lows last seen during the FTX collapse and Luna crash. Three weeks ago the index was at 61 (Greed). Historical precedent suggests a bottom is forming, but FTX-era fear lasted weeks, not days.

Regulation: Mixed Signals

The SEC dismissed proceedings against American CryptoFed DAO on February 4, acknowledging that "much has changed" since the GENIUS Act. SEC Chair Paul Atkins pledged an "innovation exemption" for crypto startups. The White House ordered the SEC and CFTC to reach agreement on market structure by the end of February.

Monad Ecosystem

The MONAD_NINE network upgrade is scheduled for activation in the first half of February 2026, bringing linear memory pricing, new introspection opcodes, and enhanced Ethereum compatibility. MON jumped 13% in anticipation. Kintsu's SuperMON vaults are offering 14.51% APY with over $100M in TVL.

Sources - Crypto: CNBC: Bitcoin drops below $61,000 | Bloomberg: Bitcoin Falls Below $70,000 | CoinDesk: Worst drawdown since FTX | CoinDesk: ETF outflows deepen | CoinDesk: Sentiment hits FTX-era lows | CoinGecko: Bitcoin | CoinGecko: Ethereum

Week Ahead

Two rescheduled data releases dominate the week. NFP lands Wednesday, February 11, delayed from February 6 by the government shutdown. Consensus: 70K jobs added. CPI lands Friday, February 13, pushed from February 11. Consensus: 2.5% YoY (down from 2.7%).

If NFP confirms Challenger weakness and CPI reaccelerates, markets face a stagflation scare. NVDA earnings on February 25 will be the next major AI data point.

Key Takeaways

BTC crashed to $60,062, erasing all post-election gains. Worst single-day drop since FTX. $2.6B+ liquidations. Fear & Greed at 9.

Gold recovered above $5,000 while BTC crashed. The "digital gold" thesis is under severe stress. Gold is trading as the safe haven. BTC is trading as a risk asset.

AI capex shock: GOOGL ($175-185B) and AMZN ($200B) combined for $375B+ in 2026 capex guidance. Markets are questioning ROI.

Central banks diverged: RBA hiked (first reversal to hikes), BoE nearly cut (5-4 vote), ECB held. Global monetary policy is pulling in different directions.

Data blackout + geopolitical stress: Government shutdown delayed NFP. Challenger showed 108K layoffs (worst Jan since 2009). Iran incidents in Strait of Hormuz. Markets had no anchor.

Key Questions

Does BTC hold $65K or retest $60K? The bounce was violent but ETF outflows continue. Monday ETF flow data will be critical.

NFP Wednesday, CPI Friday: two major reports in the same week. If both disappoint, volatility could spike again.

Is this the bottom? Fear & Greed at 9 has historically marked bottoms. But sustained ETF outflows ($6.18B since November) and institutional selling suggest structural, not just mechanical, drivers.

Gold vs BTC divergence: temporary or permanent? If gold holds above $5K while BTC struggles below $75K, the narrative shift becomes harder to reverse.

AI capex bubble or foundation? $375B+ from two companies alone. NVDA earnings on Feb 25 will provide the answer.