DCW DAILY BRIEF

Global Digital Assets, ScienceTech & Web3 Market Intelligence

Date: February 4th, 2026 | Wednesday Edition #387

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James Bowater

linkedin.com/in/james-bowater-b47612 | Twitter/X: X.com@TheDCW_JB

https://www.thedigitalcommonwealth.com/

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📊 Executive Summary

Cryptocurrency markets extended their decline on Wednesday, with Bitcoin falling below $76,500 after briefly touching $72,884 on Tuesday—its lowest level since November 2024. The breakdown follows Monday's failed recovery attempt near $80,000, as deteriorating technical conditions and persistent selling pressure overwhelm any stabilisation efforts. Tuesday's broader market selloff, which saw the S&P 500 fall 0.84% and software stocks plunge on AI automation concerns, created additional headwinds for risk assets including digital currencies.

The cryptocurrency rout comes as traditional equity markets grapple with their own challenges. The Nasdaq fell 1.43% on Tuesday whilst the tech-heavy index saw particularly acute weakness in software names, with companies including ServiceNow, Salesforce, and Adobe hitting fresh 52-week lows. The AI automation wave, highlighted by tools like Claude Code, has sparked concerns about software companies' long-term growth prospects, creating spillover pressure across technology-adjacent sectors including crypto.

Precious metals staged a partial recovery on Tuesday with gold rising 5-6% to around $5,070 and silver bouncing 10% to approximately $87 after Friday's historic collapse. However, these metals remain well below their peaks from last week when gold touched $5,600 and silver reached $120. The sharp reversals across all risk and alternative assets reflect broad-based deleveraging following Kevin Warsh's nomination as Fed Chair, with markets repricing monetary policy expectations and questioning asset valuations that were predicated on continued accommodative conditions.

📰 Today's Headlines

💹 Markets

• Bitcoin extends decline to $76,350 on Wednesday after Tuesday's breakdown below $73,000 marked lowest level since November 2024; failed recovery attempt from Monday's $77,000-$78,000 range underscores continued selling pressure with critical $75,000 support level now in focus

• Cryptocurrency markets face multi-day liquidation cascade with Tuesday seeing prices briefly touch $72,884 before modest recovery; cumulative liquidations since Friday exceed $5 billion as overleveraged positions continue unwinding across futures and perpetual swap markets

• Traditional equity markets declined Tuesday with S&P 500 falling 0.84% to 6,918 and Nasdaq dropping 1.43% to 23,255 as software sector experiences severe selloff; ServiceNow, Salesforce, and Adobe all hit fresh 52-week lows on AI automation concerns

• Private equity stocks plunge with Blue Owl, TPG, Ares Management and KKR all down double digits on Tuesday, reflecting concerns about exposure to software companies and broader tech disruption; BlackRock fell 5% as sector-wide contagion spreads

• Ethereum continues severe underperformance, trading around $2,246 on Wednesday morning—down 3% and maintaining deeply oversold conditions; ETH/BTC ratio near multi-month lows as altcoins bear disproportionate selling pressure during market stress

• Gold recovers to approximately $5,070 per ounce on Wednesday morning after Tuesday's 5-6% rebound, whilst silver climbs to $87 following 10% bounce; precious metals remain volatile but showing signs of stabilisation after historic Friday plunge

• Total cryptocurrency market capitalisation declines to approximately $2.65 trillion on Wednesday from Tuesday's $2.75 trillion, reflecting continued exodus from digital assets; Bitcoin dominance stable around 56-57% as altcoins suffer proportional losses

• US Dollar Index steady around 96.85 on Wednesday morning after moderating from Monday's 97.14; dollar strength from Kevin Warsh nomination continues creating headwinds for commodities and risk assets despite recent pullback from highs

• Crypto Fear & Greed Index remains in extreme fear territory at approximately 17, virtually unchanged from Tuesday's reading; persistent extreme fear suggests capitulation may still be underway with sentiment showing no signs of recovery

• MicroStrategy (Strategy) prepares for Q4 2025 earnings announcement scheduled for February 5th after market close; Bitcoin's struggle to hold $76,000 creates additional pressure on company trading at premium to BTC holdings

⚖️ Regulatory & Policy

• Markets continue digesting implications of Kevin Warsh Federal Reserve Chair nomination with his perceived hawkish stance driving repricing across asset classes; dollar strength and tighter monetary policy expectations create ongoing headwinds for risk assets

• US partial government shutdown delays critical economic data releases including Employment Situation report for January and JOLTS data; data vacuum increases market uncertainty and complicates Fed policy assessment ahead of potential rate decisions

• GENIUS Act implementation timeline continues with Treasury Department and FDIC conducting public consultations; stablecoin regulatory framework rules due July 18th with regulations taking effect January 18th, 2027

• Market structure legislation prospects remain in focus with Senate Banking Committee expected to resume CLARITY Act negotiations in late February; bipartisan progress before November midterm elections seen as critical window for passage

• SEC Chair Paul Atkins continues Project Crypto initiative with token taxonomy and innovation exemption framework expected to provide additional clarity; industry anticipates details on token offerings and custody arrangements in coming weeks

• California's Digital Financial Assets Law remains on track for July 1st implementation requiring crypto firms serving state residents to obtain Department of Financial Protection and Innovation licenses; other states monitoring for potential similar frameworks

• Goldman Sachs highlights regulatory clarity as primary catalyst for institutional crypto adoption with 35% of institutions citing regulatory uncertainty as biggest hurdle; market structure legislation passage in first half of 2026 seen as critical

• November midterm elections loom as potential inflection point for crypto legislative momentum; Democratic control of one or both Congressional houses could significantly slow progress despite improved bipartisan support in recent votes

📈 Market Overview

🌐 TOTAL CRYPTO MARKET CAP: $2.65 TRILLION

24h Change: ▼-3.6% | Bitcoin Dominance: ~56.8%

😱 CRYPTO FEAR & GREED INDEX: 17 (Extreme Fear)

24h Change: Unchanged | Previous: 17

💵 US DOLLAR INDEX: 96.85

24h Change: Flat | Previous: 96.85

💰 Digital Assets Performance

₿ BITCOIN (BTC)

Price: $76,350 ▼-3.4% (24h)

📊 24h Volume: ~$32 Billion | 💎 Market Cap: $1.51 Trillion | 📍 Dominance: ~56.8% | 🔝 24h Range: $72,884 - $78,000

Bitcoin's decline accelerated on Wednesday morning, falling to $76,350 after Tuesday's breakdown below $73,000 marked the lowest price since November 6th, 2024. The continued weakness follows Monday's failed recovery attempt near $78,000-$80,000, suggesting that Tuesday's modest bounce represented short-covering rather than genuine accumulation. The cryptocurrency has now declined approximately 39% from October's $126,000 all-time high, with the breakdown through multiple critical support levels erasing hopes of near-term stabilisation.

Tuesday's session saw particularly violent price action with Bitcoin briefly touching $72,884 before recovering to the mid-$75,000 range, creating a massive intraday range that reflects ongoing panic selling and forced liquidations. The breakdown through the psychological $75,000 level—which briefly served as support on Monday—indicates deteriorating technical conditions with the next major support zone identified around $68,000-$70,000. Cumulative liquidations since Friday now exceed $5 billion across long and short positions, suggesting excessive leverage continues being purged from the system.

The broader context for Bitcoin's weakness includes spillover pressure from traditional technology stocks, particularly software companies experiencing severe selloffs on concerns about AI automation. Tuesday's sharp declines in the Nasdaq (down 1.43%) and S&P 500 (down 0.84%) demonstrate that risk-off sentiment has intensified across asset classes, with Bitcoin trading as a high-beta technology proxy rather than a defensive alternative. The Crypto Fear & Greed Index remaining at 17 (extreme fear) underscores that capitulation dynamics may still be underway, with investors showing no signs of returning to the market despite deeply oversold technical conditions.

Ξ ETHEREUM (ETH)

Price: $2,246 ▼-3.0% (24h)

📊 24h Volume: ~$23.3 Billion | 💎 Market Cap: $271 Billion | 📍 24h Range: $2,110 - $2,355

Ethereum continues to underperform Bitcoin significantly, trading around $2,246 on Wednesday morning and extending losses from Tuesday's decline to the $2,200-$2,300 range. The cryptocurrency remains trapped in deeply oversold conditions with RSI readings in the low-to-mid 20s, suggesting intense selling pressure that has overwhelmed any technical bounce attempts. ETH has now declined approximately 54% from its August 2025 peak near $4,950, substantially worse than Bitcoin's 39% drawdown from October highs.

The ETH/BTC ratio continues deteriorating to multi-month lows, reflecting Ethereum's status as a higher-beta asset during risk-off periods. Whilst Bitcoin has at least briefly stabilised in the $75,000-$78,000 range, Ethereum shows no signs of finding support, with analysts identifying the $2,000-$2,100 zone as the next major technical level. The persistent weakness suggests that institutional and whale holders are reducing exposure, preferring Bitcoin's relative liquidity and lower volatility during periods of market stress.

Ethereum's struggles reflect broader altcoin weakness, with the flight to quality accelerating as Bitcoin dominance remains elevated around 56-57%. Historical patterns suggest that when Bitcoin dominance exceeds 60% during corrections, altcoins typically experience severe bear markets, and the current trajectory towards that threshold creates additional downside risk. ETH futures and options markets show defensive positioning with put/call ratios elevated, indicating traders are bracing for further downside rather than positioning for recovery.

📊 Traditional Markets & Context

Traditional equity markets experienced significant weakness on Tuesday with the S&P 500 falling 0.84% to 6,918 and the Nasdaq Composite declining 1.43% to 23,255. The selloff was led by software and technology stocks experiencing severe pressure on concerns about AI automation disrupting their business models. The sector's weakness was exemplified by ServiceNow, Salesforce, Adobe, HubSpot, and Atlassian all hitting fresh 52-week lows, whilst the iShares Software ETF fell 3.2% and is now down 20% year-to-date.

The software sector's collapse reflects growing market concerns about generative AI tools, particularly coding automation platforms like Claude Code, potentially disrupting enterprise software demand. Private equity stocks also plunged with Blue Owl, TPG, Ares Management and KKR all falling double digits, reflecting worries about their exposure to software companies and potential markdowns in private portfolio holdings. BlackRock fell 5% as contagion spread across alternative asset managers, whilst the VIX volatility index jumped above 18, indicating increased market stress.

The partial US government shutdown continues disrupting economic data releases, with the Bureau of Labor Statistics suspending the Employment Situation report for January, JOLTS data for December, and metropolitan area employment statistics. The data vacuum increases uncertainty about labour market conditions just as markets are attempting to assess the economy's trajectory and potential Fed policy responses. Treasury yields remained relatively stable with the 10-year around 4.27%, though elevated uncertainty keeps fixed income markets cautious about near-term rate expectations.

🏆 Commodities Performance

Gold: $5,070 per ounce ▲+5.6% (Tuesday) | Silver: $87 per ounce ▲+10% (Tuesday)

Precious metals staged a significant rebound on Tuesday with gold rising 5-6% to approximately $5,070 per ounce and silver surging 10% to around $87, recovering from Monday's extended losses following Friday's historic collapse. The bounce suggests some stabilisation after gold's plunge from $5,600 and silver's 30% single-day crash on Friday—the worst one-day percentage decline since March 1980. However, both metals remain well below last week's record highs, with gold down approximately 9% from peak and silver down 27%.

Tuesday's recovery followed signs that forced liquidations had subsided, with dip buyers stepping in to capitalise on lower prices. Mining stocks rallied in sympathy with London-listed Rio Tinto up 2.2%, Anglo American up 3%, and Fresnillo (world's leading silver producer) jumping sharply. Deutsche Bank strategists characterised the selloff as overshooting its catalysts, arguing that the broader investment case for precious metals remains intact given continued geopolitical uncertainty, currency debasement concerns, and central bank diversification away from dollars.

Analysts remain divided on whether the correction represents a structural turning point or temporary consolidation. JP Morgan analysts issued a note projecting gold could reach $6,300 per ounce by year-end 2026—a 30% gain from current levels—citing continued safe-haven demand and multi-faceted portfolio hedging appeal. However, silver's more dramatic volatility reflects its smaller market size and heavier retail participation, with structural supply deficits and industrial demand (particularly from solar photovoltaics) providing fundamental support despite near-term technical weakness.

📖 Market Narrative & Analysis

Wednesday morning's continued Bitcoin weakness to $76,350, following Tuesday's breakdown below $73,000, marks a decisive failure of Monday's recovery attempt and suggests the cryptocurrency remains trapped in a severe downtrend. The inability to hold the $75,000-$78,000 range for more than 24 hours demonstrates that institutional buying interest remains absent, whilst retail capitulation accelerates as overleveraged positions continue unwinding. The approximately 39% decline from October's $126,000 all-time high now exceeds the typical 30-35% corrections seen in previous bull market consolidations, raising questions about whether this represents deeper structural weakness.

The correlation between Bitcoin's collapse and Tuesday's software sector meltdown underscores crypto's continued status as a high-beta technology proxy rather than an alternative store of value. The S&P 500's 0.84% decline and Nasdaq's 1.43% fall, driven by AI automation concerns hammering enterprise software stocks, created additional selling pressure across all technology-adjacent assets. Private equity stocks plunging double digits reflects growing concerns about exposure to disrupted business models, whilst the iShares Software ETF's 20% year-to-date decline signals fundamental reassessment of sector valuations that extends beyond mere technical correction.

Perhaps most troubling is the divergence between regulatory progress and market performance. Whilst positive developments continue—including GENIUS Act implementation, SEC Project Crypto initiatives, and improving bipartisan support for market structure legislation—these medium-term catalysts are being overwhelmed by near-term macro headwinds. Kevin Warsh's Fed Chair nomination, dollar strength above 96, and tighter monetary policy expectations create an inhospitable environment for risk assets regardless of regulatory clarity. The partial government shutdown delaying critical economic data releases further compounds uncertainty, leaving markets without key inputs for assessing the economy's trajectory.

💡 DCW Intelligence & Insights

Market Structure Analysis:

Bitcoin's breakdown through $73,000 on Tuesday represents a critical failure of multiple support structures established during previous consolidation phases. The cryptocurrency has now violated the 100-week moving average, 50-day moving average, 200-day moving average, and psychological support at $75,000 in rapid succession, suggesting the technical foundation has completely deteriorated. Derivative markets show ongoing stress with put/call ratios remaining elevated and open interest declining approximately 15% from peaks, indicating sophisticated traders are reducing exposure rather than accumulating at lower levels.

The Crypto Fear & Greed Index remaining at 17 (extreme fear) for multiple consecutive days suggests capitulation is ongoing rather than complete. Historical patterns indicate that genuine market bottoms typically require sentiment readings below 10 sustained for several sessions, followed by gradual improvement as accumulation begins. The current reading suggests investors remain in panic mode, with no signs of stabilisation despite deeply oversold technical conditions across momentum indicators including RSI readings in the low 30s for Bitcoin and low 20s for Ethereum.

The upcoming MicroStrategy earnings announcement on February 5th adds additional complexity, as the company's Bitcoin holdings create potential feedback loops. With BTC briefly trading below Strategy's average entry price last weekend and now hovering only modestly above that threshold, any negative guidance or concerns about the company's strategy could trigger additional institutional selling. Conversely, strong defence of the company's approach and Bitcoin holdings could provide psychological support, though market conditions remain unfavourable for any single catalyst to reverse the downtrend.

⚠️ Risk Monitor

🔴 ELEVATED RISKS:

• Critical Support Breakdown Accelerating: Bitcoin's failure to hold $75,000 and Tuesday's breach of $73,000 represents decisive breakdown through final major support; next technical levels at $68,000-$70,000 offer limited confidence given velocity of current decline

• Technology Sector Contagion: Software stocks' severe weakness on AI automation concerns creating spillover pressure across all technology-adjacent assets; private equity stocks plunging double digits reflects broad reassessment of sector valuations beyond mere technical correction

• Sustained Extreme Fear: Fear & Greed Index remaining at 17 for multiple days suggests ongoing capitulation rather than completed washout; historical patterns indicate sentiment typically needs to reach single digits before genuine accumulation begins

• Data Vacuum From Shutdown: Partial government shutdown delaying critical economic releases including Employment Situation report increases uncertainty about labour market and economic trajectory; markets operating without key inputs for Fed policy assessment

• Altcoin Capitulation Intensifying: Ethereum's 54% decline from August peaks and persistent weakness below $2,300 suggests higher-beta assets experiencing disproportionate selling; Bitcoin dominance approaching 60% typically signals severe altcoin bear markets

• MicroStrategy Earnings Event Risk: Company's Q4 2025 results scheduled February 5th create potential for additional volatility; any negative guidance on Bitcoin strategy or concerns about holdings could trigger institutional selling feedback loops

• Precious Metals Volatility Persists: Despite Tuesday's rebound, gold and silver remain well below last week's peaks with continued whipsaw action suggesting markets have not fully stabilised; additional forced liquidations possible if volatility continues

• Regulatory Progress Overwhelmed: Positive developments including GENIUS Act implementation and SEC Project Crypto being overshadowed by macro headwinds; medium-term catalysts insufficient to reverse near-term technical damage

📅 Looking Ahead - Week of February 4th-10th, 2026

Key Events and Catalysts:

• February 4-5: Bitcoin's ability to hold $75,000 support provides first test of whether Tuesday's $72,884 low represented final capitulation or merely pause in deeper correction; Wednesday's continued weakness to $76,350 suggests downside momentum remains intact

• February 5: MicroStrategy (Strategy) Q4 2025 earnings announcement after market close represents key event risk for Bitcoin; company's guidance on Bitcoin strategy and any discussion of holdings could create significant volatility given BTC hovering near average entry price

• February 6-9: Traditional equity markets' ability to stabilise following Tuesday's software sector collapse will influence risk appetite across all asset classes; any resumption of tech weakness could trigger additional crypto selling

• Mid-February: Resolution of partial government shutdown could trigger volatility when delayed economic data releases finally published; Employment Situation report for January and JOLTS data will provide critical inputs for Fed policy assessment

• Late February: Senate Banking Committee expected to resume CLARITY Act negotiations; any signs of momentum toward market structure legislation could provide medium-term support despite near-term technical weakness

• Early March: White House-convened meetings on stablecoin yield provisions continue; compromise on contentious banking industry concerns could accelerate GENIUS Act implementation timeline and demonstrate continued regulatory progress

Week Ahead Themes:

Wednesday's continued Bitcoin weakness to $76,350, following Tuesday's breakdown below $73,000, suggests Monday's recovery attempt has failed completely and the cryptocurrency remains trapped in a severe downtrend. The inability to sustain any bounce for more than 24 hours demonstrates that institutional buying interest remains absent, whilst forced liquidations continue purging overleveraged positions from the system. The critical question for the remainder of the week is whether $75,000 can hold as support or whether the next leg down toward $68,000-$70,000 has already begun.

MicroStrategy's earnings announcement on February 5th represents the most significant near-term event risk, with the company's guidance potentially creating feedback loops given Bitcoin's proximity to their average entry price. Any indication of strategic shifts or concerns about their holdings could trigger additional institutional selling, whilst strong defence of the Bitcoin strategy might provide brief psychological support. However, the broader context of technology sector weakness, dollar strength, and tighter monetary policy expectations suggests any positive catalyst will face significant headwinds.

The divergence between positive regulatory developments and market performance underscores that near-term technical damage has overwhelmed medium-term fundamentals. Whilst GENIUS Act implementation proceeds, SEC Project Crypto advances, and bipartisan support for market structure legislation improves, these catalysts remain insufficient to reverse the current downtrend. Markets are operating in a macro environment defined by Kevin Warsh's hawkish Fed Chair nomination, elevated dollar strength, and growing concerns about AI disruption across technology sectors—creating an inhospitable backdrop for risk assets regardless of regulatory clarity.

ℹ️ About The Digital Commonwealth

The Digital Commonwealth Limited (DCW) is an independent industry organisation representing AI, Blockchain, DePIN, Digital Assets, ScienceTech, and Web3 sectors across our Community. Through strategic partnerships and industry collaboration, DCW provides comprehensive market intelligence, regulatory insights, and ecosystem development support to drive innovation and adoption of digital technologies globally.

📧 Contact Information

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Website: https://www.thedigitalcommonwealth.com/

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⚠️ Disclaimer

This briefing is provided for informational purposes only and does not constitute investment advice, financial advice, trading advice, or any other sort of advice. The Digital Commonwealth Limited does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions. Past performance is not indicative of future results.

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