Markets Drop 2.2% with IMX Hit Hardest

Crypto markets traded lower on Jan. 31, with the average move down 2.2% and breadth negative as 81 assets rose against 172 declines. The tape showed pockets of idiosyncratic strength, but the dominant feature was a broad de-risking impulse consistent with a leverage unwind, as several large-cap and high-beta tokens posted double-digit losses despite a slightly positive news count of 11 positive items versus 8 negative.

The day’s central macro narrative was the sharp drawdown in precious metals alongside a comparatively steadier bitcoin, with reports citing silver down as much as 35.0% and gold down 12.0% while bitcoin hovered around $83,000.0. That relative resilience mattered because it framed crypto’s selloff as more internal than cross-asset contagion: if bitcoin was not breaking down in tandem with metals, then the pressure likely came from positioning, risk limits, and derivatives rather than a single macro shock. Still, negative flow and positioning headlines pointing to “extreme fear” and deepening pullback reinforced that traders were treating the environment as risk-off, keeping liquidity thin and amplifying moves in alts.

A second key driver was the acceleration in leverage reduction, with market coverage flagging declines in bitcoin and ether alongside an “unwind” dynamic. That backdrop fits the day’s distribution pattern: large, liquid alts with active perpetual markets were among the worst performers, including UNI down 12.3%, AAVE down 10.8%, AVAX down 10.1% and DOGE down 10.2%. When deleveraging leads, correlations typically rise and fundamentals matter less intraday, which helps explain why a relatively balanced news slate still coincided with a heavily negative advance-decline line.

The most notable single-token news linkage was Optimism, where coverage said the network passed a buyback proposal intended to bolster the OP token, yet OP fell 12.7%. The negative reaction suggests the market either viewed the buyback as insufficient versus the scale of risk reduction, or treated the headline as a liquidity event into which holders sold. In a tape dominated by forced selling and hedging, governance catalysts often fail to re-rate tokens immediately, and the OP move reinforced that narrative by underperforming even as it delivered a superficially supportive corporate-action style signal.

Sector performance underscored how high-beta themes were hit hardest. Gaming and metaverse names were pressured, with IMX down 14.3%, AXS down 11.3% and 10.2% on separate prints, and MANA down 10.3%, a cluster consistent with investors cutting exposure to discretionary growth narratives. DeFi was also broadly weaker, led by UNI down 12.3% and AAVE down 10.8%, which aligns with the day’s “leverage unwind” framing given DeFi tokens’ sensitivity to on-chain borrowing activity and risk appetite. Infrastructure and L1/L2 exposure also sold off, with SUI down 10.6% and AVAX down 10.1%, while RNDR down 11.6% suggested AI-adjacent and compute narratives did not provide shelter.

Several of the largest moves occurred without clear catalyst, pointing to flow-driven rather than information-driven trading. IMX’s 14.3% drop, RNDR’s 11.6% decline, and SUI’s 10.6% slide had no linked news, and the same was true for UNI, AAVE, QNT and VET, implying systematic selling or liquidations. Conversely, some widely circulated headlines appeared to have limited immediate price impact: the Binance plan to convert $1.0B of its SAFU fund into bitcoin is supportive for BTC demand at the margin, but the broader market still fell; similarly, stories around XRP ledger amendments and “institutional DeFi” readiness did not show up in the day’s listed leaders or laggards. The day also featured conflicting FTM prints, including +12.9% and -11.6%, which reads as data inconsistency or venue-specific volatility rather than a clean, news-led trend.

The clearest takeaway is that price discovery was dominated by positioning and liquidity rather than fundamentals, with buyback headlines failing to support OP and broad sector drawdowns hitting DeFi and gaming simultaneously. For Feb. 1, the key watch is whether bitcoin can reclaim and hold the $84,000.0 area referenced as a “crucial” level in market commentary, because stabilization there would typically slow liquidation-driven selling in alts. Traders will also monitor any follow-through from the Fed-chair nomination narrative and upcoming policy discussions on stablecoin rewards, but the near-term signal will come from whether breadth improves from 81 gainers versus 172 decliners and whether the largest high-beta tokens stop printing double-digit down days without clear catalyst.