Any deterioration will push up safe-haven assets (gold) and suppress risk assets (stocks, cryptocurrencies).

Written by: Mamun Niu, Deep Tide TechFlow

U.S. Stocks: The Doomsday of Software Stocks

February 4 (Tuesday) U.S. stock market close:

• Dow Jones: 49,241 points (-0.34%)
• S&P 500: 6,918 points (-0.84%)
• Nasdaq: 23,255 points (-1.43%)

This does not look like a normal adjustment; it resembles a crisis of faith in the tech sector.

Today, the hardest hit was the software sector. The WisdomTree Cloud Computing Fund plummeted 3.2%, marking its sixth consecutive trading day of decline, setting a record for the longest losing streak of the year.

A large number of enterprise software stocks hit 52-week lows:

Salesforce fell nearly 7%; ServiceNow fell nearly 7%; IBM fell 6.28%; Workday, Adobe, DocuSign, and Asana all hit new lows.

Why did software stocks collectively crash?

The market suddenly realized a harsh reality: AI is not here to help SaaS companies; it is here to replace them.

In the past few weeks, investors' attitudes toward enterprise software have turned 180 degrees. They initially thought AI would make these software products stronger, but now they realize AI might directly replace their functions. Why pay for a Salesforce subscription if an AI assistant can directly help you manage customer relationships? Why use ServiceNow if AI can automatically handle work orders?

This is not a matter of overvaluation; it is a panic over a disrupted business model.

The performance of the seven tech giants today was mixed:

Microsoft fell over 2%; Meta fell over 2%; Nvidia fell nearly 3%; Apple saw a slight decline.

The only bright spot was Palantir, which rose 6.8% after reporting better-than-expected earnings last night. However, this exception highlights the market's selectivity: funds are only willing to pay for companies with real AI applications in place.

Nvidia's troubles are escalating. OpenAI is dissatisfied with Nvidia's latest AI chips, causing a $100 billion investment plan to stall. This is not just Nvidia's problem; it reflects a crack in the entire AI infrastructure investment narrative: if technology is iterating so quickly, will the hundreds of billions in capital expenditures invested now soon become obsolete?

PayPal plummeted 15% in pre-market trading and closed down over 20%.

Earnings reports showed: fourth-quarter profits fell short of expectations; 2026 profit guidance was disappointing; U.S. retail spending was weak; brand checkout business growth was slow.

PayPal's collapse is not an isolated incident but a clear signal of slowing consumer spending. If even the infrastructure of online payments is struggling to grow, it indicates that the underlying economic momentum is weakening.

The Dow Jones only fell 0.34%, much better than the Nasdaq's 1.43%. The reason is:

Defensive sectors supported: Verizon rose 3.59%, Cisco rose 3.08%, Walmart rose 2.97%; funds are rotating: from overvalued tech stocks to value stocks and defensive stocks.

This is typical "risk-averse" behavior. When investors start to doubt the narrative around tech stocks, they turn to "old economy" companies with real cash flow, low valuations, and high dividends.

Cryptocurrency: From Bear Market to "Crypto Winter"

Bitcoin fell below $73,000, hitting a 16-month low.

Bitcoin briefly dropped to $72,884, the lowest since November 6, 2024. At one point, Ethereum fell below $2,200, down 6.5% for the day, and Solana fell below $100, down 5.5% for the day.

Matt Hougan, Chief Investment Officer of Bitwise Asset Management, released a report stating bluntly:

"This is not a pullback in a bull market, nor is it a 'buy the dip' opportunity. This is a comprehensive, 2022-style, 'The Revenant'-level crypto winter."

He pointed out that the crypto market has been in a bear market since January 2025, but many people are unwilling to admit it. The good news is that if this is indeed a 2022-style bear market, it means the bottom may be approaching.

Why is cryptocurrency crashing so badly?

• Deteriorating macro environment

U.S. tech stocks plummeted, risk appetite collapsed; non-farm employment data was delayed, leaving the market "blind flying"; the dollar rebounded, which is unfavorable for cryptocurrencies.

• Liquidity exhaustion

In the past week, there was a net outflow of $1.7 billion from digital asset investment products. Since the beginning of 2026, the cumulative outflow has reached $1 billion. The head of research at CoinShares stated that this "marks a significant deterioration in investor sentiment towards this asset class."

• Passive liquidation spiral

Since last Thursday, over $2 billion in long and short positions in Bitcoin have been forcibly liquidated. On Saturday, the single-day liquidation amount reached $2.56 billion, making it the 10th largest single-day liquidation event in history. Liquidation can trigger a chain reaction: price drop → triggering forced liquidation → increased selling pressure → further price drop. In a thinly traded weekend market, this spiral is even more deadly.

Where is Bitcoin headed next?

From a technical perspective:

Current support level: $72,000-$70,000 range; if it falls below $70,000, the next stop is $68,000; a more pessimistic scenario: it could pull back to $58,000-$62,000.

From a fundamental perspective:

Trump's promised "strategic Bitcoin reserve" has yet to make progress; regulatory bills like the Clarity Act are moving slowly; the Fed's hawkish shift (Waller's nomination) is unfavorable for liquidity.

Market sentiment:

Fear and Greed Index: 14 (extreme fear); RSI is close to the oversold zone but has not reached extreme levels; year-to-date, Bitcoin has fallen 16%.

Precious Metals: Epic V-Shaped Reversal

Spot gold closed at about $4,991 per ounce, rising over 5% for the day. It briefly broke through $5,016. This is the largest single-day increase since November 2008.

Silver also rebounded strongly, rising nearly 10% to around $87.

Why was gold able to make a V-shaped reversal?

"Waller Panic" has been digested.

Last Friday, Trump nominated Waller as Fed Chair, triggering a historic plunge in gold (an 11% drop in a single day). The market's initial reaction was panic selling: Waller = hawkish → interest rates remain high → dollar strengthens → gold loses its appeal.

But today, investors began to reassess:

Waller won't take office until May at the earliest, and the current panic is excessive; even if Waller is hawkish, he cannot ignore economic data; the market still expects two rate cuts in 2026.

Gold plummeted from $5,600 to $4,400, a drop of over 20%. This crash cleared out leveraged speculators and created a "gold pit."

Long-term investors and central banks began to buy the dip.

JPMorgan reiterated today: the target price for gold by the end of 2026 is $6,300, believing the current pullback is a "high-value reaccumulation opportunity."

Additionally, the January non-farm payroll report originally scheduled for release this Friday has been postponed (due to part of the government shutdown). This has left the market without the most important economic data reference, increasing uncertainty. Uncertainty = gold's friend.

Overall, the long-term logic for gold remains unchanged.

Today's rebound is not a "dead cat bounce," but a real buying opportunity supported by fundamentals:

Global central banks continue to buy gold (expected to purchase 800 tons in 2026); long-term depreciation pressure on the dollar remains; the trend of "de-dollarization" among countries is irreversible; U.S. national debt is $38 trillion, and the collapse of fiscal discipline has triggered a crisis of trust in fiat currency.

Both JPMorgan and Deutsche Bank believe that gold will rise to $6,000-$6,300 this year. Currently around $5,000, there is still over 20% upside potential.

The Core Contradiction in the Market: AI Bubble vs. Economic Resilience

Today's market movements reveal a deep contradiction:

On one hand, the AI narrative surrounding tech stocks is being questioned. The crash of software stocks, Nvidia's setbacks, and PayPal's plummet all point to the same issue: the speed of AI's commercial monetization is not keeping pace with the frenzied growth of capital expenditures. Tech giants are expected to spend $440 billion on capital expenditures in 2026; if these investments do not yield corresponding returns, the bubble will burst.

On the other hand, traditional economic sectors are performing robustly. Verizon, Cisco, and Walmart all rose over 2% today. The Dow Jones only fell 0.34%, much better than the Nasdaq's 1.43%. This indicates that the economic fundamentals have not collapsed; the market is merely repricing the valuations of tech stocks.

Cryptocurrency is caught in a squeeze: it is neither a true safe-haven asset (when gold surges, Bitcoin crashes) nor a purely risk asset (when U.S. stocks are merely adjusting, Bitcoin enters a winter). This "no-win" situation makes the crypto market the most vulnerable sector currently.

Key Points for the Remainder of the Week

Wednesday-Thursday: Earnings Reports from Tech Giants

• Amazon, Alphabet (Google)

If these earnings reports fall short of expectations, tech stocks may further crash. If they exceed expectations, it may temporarily stabilize market sentiment.

Friday (if released): Non-Farm Employment Data

Currently delayed due to the government shutdown. Once released, it will be key to judging whether the Fed will cut rates in March.

Geopolitics:

• Friday U.S.-Iran talks
• Progress in Ukraine peace talks

Any deterioration will push up safe-haven assets (gold) and suppress risk assets (stocks, cryptocurrencies).

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