Markets Drop 2.1% with FTM Hit Hardest

Crypto markets started February on the back foot, with the average tracked asset down 2.1% and breadth decisively negative at 97 assets up versus 199 down. Price action skewed to high-beta majors and liquid alts, while news sentiment was overwhelmingly risk-off with 11 negative items against one positive, reinforcing a tape that is reacting more to macro-style positioning and liquidity than to idiosyncratic fundamentals.

The dominant driver was renewed pressure in spot and ETF-linked flows, with reports of crypto ETFs bleeding $790.0 million alongside headlines about the SEC pausing ETF and other key crypto decisions ahead of another U.S. government shutdown. The combination matters because it hits both sides of the marginal buyer equation: reduced incremental demand via passive vehicles and a higher perceived policy-error premium that can widen risk spreads. The market reaction showed up in correlated selling across large caps, with Ethereum down 9.9% on the day’s risk-off narrative and broader commentary pointing to fear deepening as Bitcoin and Ethereum extended their pullback.

The second key story was a Solana ecosystem security shock, after Step Finance said it was investigating a $29.0 million treasury wallet compromise. Solana fell 10.1% in the steepest large-cap move on the list, and the linked headline likely amplified an already fragile bid by adding a concrete, chain-specific risk to a market that was already de-risking. In practice, these incidents tend to tighten liquidity across the affected ecosystem as market makers reduce inventory and DeFi users pull collateral, which can translate into outsized spot moves relative to the broader market decline.

A third thread was deleveraging risk, with liquidation-focused coverage highlighting Bitcoin holding below $80,000 and Ethereum described as entering “FTX-era stress,” a framing that speaks to positioning rather than protocol health. Even where spot prices briefly rebounded above $75,000 in thin liquidity, the emphasis on liquidation-driven moves suggests that order books are shallow and that forced selling can still dominate intraday direction. That backdrop also helps explain why weekend-style drawdowns echoed into Monday trading, with narratives about large market-cap losses feeding reflexive risk reduction.

Sector performance reinforced a classic risk-off pattern. Privacy coins were hit hardest, with Monero logging multiple large prints between -8.9% and -11.4%, consistent with the segment’s tendency to underperform when liquidity contracts and when regulatory headlines are noisy. Gaming and metaverse-linked tokens also weakened, with Axie Infinity down 9.4% and Immutable down 9.0%, reflecting the market’s preference to cut longer-duration, growth-sensitive exposures first. DeFi and smart-contract beta led the downside as well, with Solana’s idiosyncratic shock compounding broader selling, while Ethereum’s near-10.0% drop pulled liquid staking proxies lower, including stETH down 10.7%, pointing to stress in ETH-adjacent positioning rather than a single staking-specific catalyst.

Several of the largest moves occurred without clear catalyst, which is often the signature of portfolio-level de-risking rather than token-specific information. Fantom’s 24.0% slide stood out as the day’s sharpest drop with no linked news, suggesting thin liquidity and stop-driven selling. Conversely, some widely circulated narratives did not map cleanly to relative performance: Bitcoin-specific flow and forecast headlines dominated the news list, yet the biggest price damage concentrated in SOL, stETH, and privacy and gaming names, implying that traders expressed macro caution through higher-beta instruments rather than through BTC alone.

The takeaway is that today’s tape looked more like a liquidity event than a fundamentals repricing, with ETF outflow headlines and policy uncertainty setting the tone and a Solana security incident adding localized stress. For tomorrow, watch whether ETF flow data stabilizes and whether Solana ecosystem messaging clarifies the scope of the Step Finance compromise, as both will influence whether selling remains broad-based or narrows to the most levered and ecosystem-exposed pockets. If liquidity stays thin, downside can remain nonlinear, and any rebound is likely to be fragile until forced-selling indicators and flow data stop deteriorating.