Markets Drop 4% with FTM Hit Hardest

Crypto markets traded lower on Feb. 1, 2026, with an average move of -4.0% across major tracked assets. Breadth was decisively negative with 67 assets up and 245 down, consistent with a risk-off tape rather than isolated idiosyncratic weakness. News flow was mixed but tilted slightly bearish with 5 positive items and 6 negative, and price action suggested positioning and leverage mattered more than narrative.

The day’s most market-relevant development was the reported investigation by Step Finance into a $29.0 million compromise of a treasury wallet, which put Solana-linked risk back in focus. SOL fell -14.1% and underperformed the broader market, a move consistent with investors pricing not only the direct incident but also second-order effects such as reduced DeFi activity, tighter risk limits for Solana-native projects, and a higher perceived probability of further operational losses. The selloff’s intensity indicated that traders treated the headline as a confidence shock rather than a contained event, amplifying downside into thin weekend liquidity.

The second key driver was the continued drawdown in bitcoin, with multiple reports framing a drop into the $75,000–$80,000 zone alongside liquidation pressure approaching $1.0 billion. Even where coverage highlighted dip-buying and accumulation, the price action reflected forced selling dynamics typical of leveraged unwind phases, which tends to raise cross-asset correlations and pull high-beta altcoins lower. The day’s worst performers fit that pattern, with large-cap and liquid alts absorbing de-risking flows rather than rotating into perceived “safer” majors.

A third story worth tracking was the policy backdrop, led by Hong Kong’s stablecoin ordinance taking effect and India facing renewed pressure to revisit crypto taxes ahead of the Union Budget as trading reportedly shifts offshore. Neither item provided immediate price support, but both reinforce a bifurcated regulatory environment: clearer rulemaking in some hubs alongside tax and compliance friction in large retail markets. Over time, that mix can reshape liquidity venues and onshore/offshore volumes, which matters most during stress when market depth and fiat rails determine how quickly prices gap.

Sector performance showed a broad high-beta washout rather than a single-theme unwind. Gaming and metaverse names were among the hardest hit, with SAND down -13.8% and AXS down -13.7% (with an additional AXS print at -13.5%), consistent with investors selling longer-duration, growth-sensitive tokens first. DeFi and smart-contract exposure also weakened sharply, with INJ down -13.7% and LDO down -13.2%, while L1/L2 and infrastructure names such as FTM (-24.3%), APT (-16.4%), SUI (-14.5%), and FIL (-14.7%) fell in a way that suggests beta and positioning dominated fundamentals; DOGE (-13.1%) added a risk-proxy signal rather than a meme-specific catalyst.

Several of the largest moves occurred without clear catalyst, a notable feature of the session. FTM’s -24.3% drop, alongside steep declines in APT, IMX (-15.1%), FIL, and SUI, lacked linked headlines, pointing to mechanical drivers such as stop cascades, liquidity gaps, or concentrated de-leveraging in perpetuals rather than new information. Conversely, some positive headlines did not translate into price resilience: reports of active Solana addresses rising and institutional onchain finance funding improving were overwhelmed by the Step Finance incident and the broader risk-off tape, while an item on XRP ETF inflows was not sufficient to offset the market’s correlation to bitcoin’s drawdown.

The clearest takeaway is that the market is trading macro-style, with leverage and confidence shocks setting the tone and idiosyncratic positives failing to attract incremental bids. For Feb. 2, the main watchpoints are whether bitcoin stabilizes in the $75,000–$80,000 band without renewed liquidation spikes, whether Solana ecosystem tokens decouple once more detail emerges on the Step Finance compromise, and whether breadth improves from 67 advancers versus 245 decliners, which would be an early signal that the selloff is transitioning from forced selling to selective risk-taking.