February 4 Market Recap: Software Stock Crash Triggers Chain Reaction; Safe-Haven Assets Rally Sharply
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February 4 Market Recap: Software Stock Crash Triggers Chain Reaction; Safe-Haven Assets Rally Sharply
Any deterioration will boost safe-haven assets (e.g., gold) and weigh on risk assets (e.g., stocks, cryptocurrencies).
Navigating Web3 tides with focused insightsBy Ma Mengniu, TechFlow
U.S. Equities: Software Sector’s Doomsday
Tuesday, February 4 U.S. Market Close:
- Dow Jones Industrial Average: 49,241 points (-0.34%)
- S&P 500: 6,918 points (-0.84%)
- Nasdaq Composite: 23,255 points (-1.43%)
This doesn’t look like an ordinary correction—it resembles a crisis of faith in the technology sector.
Today’s biggest casualty was the software sector. The WisdomTree Cloud Computing Fund plunged 3.2%, marking its sixth consecutive day of losses—the longest losing streak this year.
A wave of enterprise software stocks hit 52-week lows:
Salesforce fell nearly 7%; ServiceNow dropped nearly 7%; IBM declined 6.28%; Workday, Adobe, DocuSign, and Asana all hit new 52-week lows.
Why did software stocks collapse en masse?
Markets have suddenly confronted a harsh reality: AI isn’t here to assist SaaS companies—it’s here to replace them.
Over the past few weeks, investor sentiment toward enterprise software has undergone a complete 180-degree reversal. What was once viewed as AI-enhanced software is now seen as software whose core functions may be fully supplanted by AI. Why pay for a Salesforce subscription when an AI assistant can manage your customer relationships directly? Why use ServiceNow when AI can automatically process service tickets?
This isn’t about overvaluation—it’s panic triggered by a fundamental disruption of business models.
The “Magnificent Seven” tech giants showed divergent performance today:
Microsoft fell over 2%; Meta dropped over 2%; NVIDIA declined nearly 3%; Apple edged lower.
The sole bright spot was Palantir, which surged 6.8% after reporting better-than-expected earnings after hours last night. Yet this outlier only underscores market selectivity: capital flows exclusively to companies with real, deployed AI applications.
NVIDIA’s troubles are intensifying. OpenAI reportedly expressed dissatisfaction with NVIDIA’s latest AI chips, stalling their $100 billion investment plan. This isn’t just NVIDIA’s problem—it reveals a crack in the entire AI infrastructure investment narrative: if technological iteration accelerates this rapidly, could hundreds of billions in current capital expenditures become obsolete almost overnight?
PayPal plunged 15% pre-market and closed down over 20%.
Its earnings revealed: Q4 profits missed expectations; 2026 profit guidance disappointed; U.S. retail spending remains weak; growth in branded checkout services is sluggish.
PayPal’s collapse isn’t isolated—it’s a clear signal of slowing consumer spending. If even foundational infrastructure like online payments shows stagnating growth, it indicates weakening underlying economic momentum.
The Dow fell only 0.34%, far outperforming the Nasdaq’s 1.43% decline—because:
Defensive sectors provided support: Verizon rose 3.59%, Cisco gained 3.08%, Walmart climbed 2.97%; capital rotated from high-valuation tech stocks into value and defensive stocks.
This is classic “risk aversion.” When investors begin questioning tech’s narrative, they pivot to “old economy” companies offering real cash flow, low valuations, and high dividends.
Cryptocurrency: From Bear Market to “Crypto Winter”
Bitcoin broke below $73,000—its lowest level in 16 months.
Bitcoin briefly fell to $72,884—the lowest since November 6, 2024. Ethereum briefly dipped below $2,200, dropping 6.5% intraday; Solana slid below $100, falling 5.5% intraday.
Matthew Hougan, Chief Investment Officer at Bitwise Asset Management, issued a blunt report:
“This isn’t a bull-market correction, nor is it a ‘buy-the-dip’ opportunity. It’s a full-blown, 2022-style, ‘The Revenant’-level crypto winter.”
He noted that the crypto market entered bear territory in January 2025—many simply refused to acknowledge it. The silver lining? If this truly mirrors the 2022 bear market, a bottom may be near.
Why has cryptocurrency collapsed so severely?
- Worsening macro environment
Plunging U.S. tech stocks shattered risk appetite across the board; the nonfarm payroll report was delayed, leaving markets flying blind; the dollar rebounded—negative for crypto.
- Liquidity drought
Digital asset investment products saw net outflows of $1.7 billion last week. Year-to-date 2026 outflows have reached $1 billion. CoinShares’ Head of Research stated this “marks a significant deterioration in investor sentiment toward this asset class.”
- Passive liquidation spiral
Since last Thursday, over $2 billion in long and short Bitcoin positions were forcibly liquidated. On Saturday alone, $2.56 billion was liquidated—the 10th-largest single-day liquidation event on record. Liquidations trigger cascading effects: price drops → margin calls → intensified selling pressure → further price declines. In the illiquid weekend market, this spiral becomes especially lethal.
Where Next for Bitcoin?
Technically:
Current support: $72,000–$70,000 range; if $70,000 breaks, next target is $68,000; a more pessimistic scenario sees a drop to $58,000–$62,000.
Fundamentally:
Trump’s promised “Strategic Bitcoin Reserve” remains stalled; regulatory bills like the Clarity Act advance slowly; the Fed’s hawkish pivot (Wash nomination) is liquidity-negative.
Market sentiment:
Fear & Greed Index: 14 (“Extreme Fear”); RSI approaches oversold territory but hasn’t yet reached extremes; YTD, Bitcoin is down 16%.
Precious Metals: Epic V-Shaped Reversal
Spot gold closed near $4,991 per ounce—up over 5% intraday. It briefly breached $5,016—its largest single-day gain since November 2008.
Silver also rebounded strongly, surging nearly 10% to around $87.
Why did gold execute a V-shaped reversal?
The “Wash Panic” has been digested.
Last Friday, Trump’s nomination of Wash as Fed Chair triggered a historic gold selloff (down 11% in one day). Initial market reaction was panic-driven selling: Wash = hawkish → rates stay higher → dollar strengthens → gold loses appeal.
But today, investors began reassessing:
Wash won’t take office until May at the earliest—the earlier panic was excessive; even if Wash is hawkish, he cannot ignore economic data; markets still anticipate two rate cuts in 2026.
Gold plunged from $5,600 to $4,400—a drop exceeding 20%. Such a sharp decline flushed out leveraged speculators and created a “gold dip.”
Long-term investors and central banks began accumulating.
JPMorgan reiterated today: gold’s year-end 2026 target is $6,300, calling the current pullback a “high-value reaccumulation opportunity.”
Additionally, the January nonfarm payroll report—originally scheduled for this Friday—was postponed due to a partial government shutdown. This deprived markets of the most critical economic data point, increasing uncertainty. Uncertainty = gold’s friend.
Overall, gold’s long-term thesis remains intact.
Today’s rally wasn’t a “dead cat bounce”—it reflected genuine buying supported by fundamentals:
Global central banks continue buying gold (800 tonnes expected in 2026); long-term dollar depreciation pressure persists; global “de-dollarization” is irreversible; $38 trillion in U.S. Treasury debt and deteriorating fiscal discipline fuel fiat currency trust crises.
Both JPMorgan and Deutsche Bank forecast gold will rise to $6,000–$6,300 this year. With gold currently near $5,000, upside potential exceeds 20%.
Core Market Contradiction: AI Bubble vs. Economic Resilience
Today’s market action exposed a deep contradiction:
On one hand, the tech sector’s AI narrative is under scrutiny. Software stocks crashed; NVIDIA hit headwinds; PayPal plummeted—all signaling the same issue: AI’s commercial monetization pace lags far behind frenzied capital expenditure growth. Tech giants’ projected 2026 capex stands at $440 billion—if these investments fail to generate commensurate returns, the bubble will burst.
On the other hand, traditional economic sectors held up well. Verizon, Cisco, and Walmart all rose over 2% today. The Dow’s mere 0.34% decline starkly contrasted the Nasdaq’s 1.43% fall—indicating the economy’s fundamentals remain intact; markets are merely repricing tech valuations.
Crypto sits in the middle: neither a true safe-haven asset (gold soared while Bitcoin tumbled), nor a pure risk asset (U.S. equities adjusted mildly while Bitcoin descended into winter). This “unloved-by-both-camps” status makes crypto the most vulnerable sector right now.
Key Events Remaining This Week
Wednesday–Thursday: Tech Mega-Cap Earnings
- Amazon, Alphabet (Google)
If results disappoint, tech stocks could face further collapse. If they exceed expectations, market sentiment may stabilize temporarily.
Friday (if released): Nonfarm Payroll Report
Currently postponed due to the government shutdown. Once published, it will be pivotal in determining whether the Fed cuts rates in March.
Geopolitics:
- U.S.–Iran talks on Friday
- Progress on Ukraine peace negotiations
Any deterioration would boost safe-haven assets (gold) and pressure risk assets (equities, crypto).
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