Markets Drop 1.6% with AXS Hit Hardest

Crypto markets traded lower on Jan. 26, with the average tracked asset down 1.6% as breadth deteriorated to 64 assets up versus 97 down. The tape was risk-off rather than one-sided panic, with news sentiment evenly split at 9 positive and 9 negative items, but price action showed sellers controlling the higher-beta segments. Bitcoin-focused headlines pointed to a pullback from recent highs, and the decline in majors fed into broader deleveraging across altcoins.

The day’s dominant macro driver was the drawdown in bitcoin from its monthly peak, with multiple reports flagging a slide below $88,000 and a spike in hourly liquidations. That combination typically tightens liquidity conditions across the complex by forcing market makers and leveraged longs to reduce exposure, and it matched the session’s broad-based weakness. The reaction was visible in large-cap risk assets such as Solana, which fell 6.5% even as a separate institutional-adoption headline crossed, underscoring that flow-driven selling outweighed narrative support.

Regulatory pressure on privacy assets was the clearest single-asset catalyst, after reports said Monero, Zcash and Dash were prohibited in India amid a money-laundering crackdown. Monero dropped 10.4%, a move consistent with the sector’s sensitivity to exchange access and compliance risk, and it served as a reminder that idiosyncratic policy headlines can still dominate correlations on days when the broader market is already weak. The selloff also likely reflected positioning, as privacy coins tend to be held by a narrower investor base and can gap on negative jurisdictional news.

In contrast, the most constructive fundamental headline was R3’s bet on Solana to bring institutional yield onchain, but the market treated it as secondary to the risk-off tape. Solana’s 6.5% decline alongside that news suggested investors were de-risking first and reassessing narratives later, a pattern common when bitcoin volatility rises. Separately, ETF-related headlines were mixed, including a report that institutional demand for XRP ETFs is cooling, which reinforced the theme that incremental demand from regulated wrappers may be less reliable than earlier in the cycle.

Sector performance was led lower by gaming and metaverse tokens, where the selloff looked like a classic unwind after outsized prior gains. Axie Infinity was the day’s outlier, down 22.9% and 17.1% in separate prints tied to commentary about whales buying into a pullback risk after a 41.0% rally, suggesting profit-taking met late dip-buying and produced a sharp reversal. The Sandbox fell 12.4% and 10.7% and Decentraland slid 9.8% and 7.0%, both moves without clear catalyst, while adjacent “infrastructure for gaming” names such as Immutable dropped 7.9%, pointing to a broad derating of the theme rather than a single-token issue.

Several large moves lacked an obvious news trigger, which is often a sign that positioning and liquidity are doing more work than fundamentals. Fantom was the exception on the upside, rising 7.5% even as another print showed it down 8.2%, a divergence consistent with thin liquidity and rapid rotation rather than a stable repricing; it moved without clear catalyst. Render fell 7.5% alongside a technical note about holding above $2.0, while Quant, ICP and Theta each slid between 6.9% and 7.6% without linked news, implying the market was selling “risk beta” baskets rather than discriminating by story.

The clearest takeaway is that today’s downside was driven more by macro positioning and forced selling than by a single negative headline, with regulatory risk adding pressure in privacy coins and post-rally fragility showing up in gaming and metaverse tokens. The key watch for tomorrow is whether bitcoin stabilizes after the liquidation burst; if volatility compresses, the market may rotate back into higher-beta names, but if spot weakness persists, sectors that led the last rally are likely to remain the first source of liquidity. Investors will also be watching whether ETF-flow narratives, including cooling XRP ETF demand, translate into measurable flow data or remain headline noise in a market still trading the tape.