Markets Drop 1.3% with FTM Hit Hardest

Crypto markets traded lower on February 4, with the average tracked asset down 1.3%. Breadth was negative with 70 assets higher and 156 lower, while news sentiment was evenly split at 20 positive and 20 negative items, consistent with a market that is reacting more to positioning and liquidity than to a single dominant headline.

The day’s most market-relevant theme was renewed focus on bitcoin downside risk around key technical levels, with multiple outlets flagging weakening momentum and “crypto winter” conditions alongside intermittent signs of ETF-related demand. The combination matters because it frames the current tape as a contest between incremental institutional inflows and broader risk reduction, and price action leaned toward the latter as selling pressure persisted despite scattered “flows are back” narratives. The market reaction suggested that any marginal ETF support is being absorbed by de-risking elsewhere, rather than translating into broad-based upside.

A second focal point was Ripple’s February escrow event, which left 33.9 billion XRP in escrow after a one-billion unlock, a recurring supply overhang that traders monitor for distribution risk even when actual net sales are limited. XRP fell 5.5% alongside the broader market, and the move fit the pattern of large-cap alts underperforming on days when liquidity thins and supply optics matter more than fundamentals. The escrow headline did not read as a shock, but it likely reinforced cautious positioning in a token that already trades heavily on narrative and calendar effects.

The third story was Aave’s decision to wind down the Avara umbrella brand and shut down the Family wallet as it refocuses on DeFi, a signal that product consolidation is accelerating as teams prioritize core revenue lines in a softer cycle. The immediate market impact was muted in the listed price movers, but the strategic read-through is that consumer-facing wallet experiments are being deprioritized relative to protocol economics, which tends to support incumbents with clear fee capture and penalize peripheral bets. In the same risk-management vein, reports of losses at Galaxy Digital and Nomura’s crypto arm added to the institutional caution backdrop, even if they were not direct catalysts for any single token’s move.

Sector performance showed sharp idiosyncratic drawdowns in gaming and high-beta alts, with Axie Infinity down 12.7% and 7.2% across prints and broader weakness in speculative exposure. Privacy coins were singled out, with Monero down 7.6% on a report that privacy assets led declines, consistent with their tendency to gap lower when risk appetite fades and when regulatory sensitivity rises. Large-cap smart-contract exposure also leaned heavy, with Solana down 5.0% even as some commentary pointed to oversold signals, and Optimism down 5.6%, indicating that “oversold” messaging did not translate into immediate dip-buying.

Several of the largest moves occurred without clear catalyst, led by Fantom’s repeated downdrafts of 12.9%, 12.3%, 5.9% and 5.5% across observations, a pattern more consistent with forced selling, thin liquidity, or unwind activity than with new information. Axie’s outsized decline similarly lacked a linked headline, suggesting that gaming tokens were used as liquidity sources during the risk-off session rather than repriced on fresh fundamentals. Conversely, some news flow did not map cleanly to price, including upbeat items around tokenization access via MetaMask and institutional settlement integrations, which read as structurally positive but were not strong enough to offset near-term deleveraging.

The clearest divergence on the tape was Cardano, up 5.0% despite the market’s negative breadth, aligning loosely with ETF-related headlines that mentioned new Cardano products even if the price move had no direct linked catalyst. That contrast underscored a market that is increasingly selective: pockets with a near-term narrative or product wrapper can rally even as the average asset slides, while crowded or illiquid names can fall hard absent news. The result was a session defined less by uniform macro beta and more by where liquidity was available to sell.

The takeaway is that today’s decline looked driven by positioning and liquidity, not by a single headline shock, and that makes tomorrow’s market sensitive to flow confirmation rather than commentary. Traders will be watching whether ETF-related “fresh capital” claims show up in sustained spot strength, and whether bitcoin can stabilize around widely cited support zones; failure to do so would keep pressure on high-beta sectors that already saw double-digit drops without catalysts. If stabilization does emerge, the first test will be whether it lifts broad breadth, or merely produces isolated rebounds in the same narrative pockets that held up today.