Written by: Ma Mengniu, Deep Tide TechFlow
US Stocks: The End of Software Stocks
US Market Close on February 4th (Tuesday):
- Dow Jones: 49,241 points (-0.34%)
- S&P 500: 6,918 points (-0.84%)
- Nasdaq: 23,255 points (-1.43%)
This doesn't look like a typical correction; it feels more like a crisis of faith in the tech sector.
The software sector was hit the hardest today. The WisdomTree Cloud Computing Fund plummeted 3.2%, marking its sixth consecutive day of decline and setting the longest losing streak of the year.
A large number of enterprise software stocks fell to 52-week lows:
Salesforce down nearly 7%; ServiceNow down nearly 7%; IBM down 6.28%; Workday, Adobe, DocuSign, Asana all hit new lows.
Why the collective crash in software stocks?
The market suddenly realized a harsh reality: AI isn't here to help SaaS companies; it's here to replace them.
Over the past few weeks, investor sentiment toward enterprise software has done a 180. Initially, they thought AI would make these software tools more powerful, but now they see that AI might directly replace their functions. Why pay for a Salesforce subscription if an AI assistant can manage customer relationships directly? Why use ServiceNow if AI can automatically handle service tickets?
This isn't a problem of overvaluation; it's panic over a disrupted business model.
The "Magnificent Seven" tech giants showed mixed performance today:
Microsoft down over 2%; Meta down over 2%; Nvidia down nearly 3%; Apple slightly down.
The only bright spot was Palantir, which reported better-than-expected earnings after hours yesterday and rose 6.8% today. But this lone example highlights the market's selectivity: funds are only willing to pay for companies with real, tangible AI applications.
Nvidia's troubles are intensifying. OpenAI is dissatisfied with Nvidia's latest AI chips, causing a stalemate in their $100 billion investment plan. This isn't just a problem for Nvidia; it's a crack in the entire AI infrastructure investment narrative: if technology is iterating this fast, will the hundreds of billions in capital expenditure being deployed now become obsolete quickly?
PayPal plummeted 15% in pre-market trading today and closed down over 20%.
Earnings report showed: Q4 profit below expectations; disappointing 2026 profit guidance; weak US retail spending; slow growth in branded checkout business.
PayPal's crash is not an isolated event but a clear signal of slowing consumer spending. If even online payment infrastructure is seeing weak growth, it suggests the underlying momentum of the economy is weakening.
The Dow fell only 0.34%, much better than the Nasdaq's 1.43%. The reason:
Defensive sectors provided support: Verizon up 3.59%, Cisco up 3.08%, Walmart up 2.97%; Funds are rotating: from high-valuation tech stocks to value stocks and defensive plays.
This is classic "risk-off" behavior. When investors start doubting the tech stock narrative, they shift towards "old economy" companies with real cash flows, low valuations, and high dividends.
Cryptocurrency: From Bear Market to "Crypto Winter"
Bitcoin fell below $73,000, hitting a 16-month low.
Bitcoin once fell to $72,884, the lowest since November 6, 2024. Ethereum fell below $2200, down 6.5% on the day, Solana fell below $100, down 5.5% on 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 a 'buy the dip' opportunity. This is a full-blown, 2022-style, 'The Revenant'-level crypto winter."
He pointed out that the crypto market entered a bear market in January 2025, but many were unwilling to admit it. The good news is, if this is truly a 2022-style bear market, it means the bottom might be near.
Why is crypto crashing so hard?
- Deteriorating Macro Environment
US tech stock crash, overall risk appetite collapses; Nonfarm payrolls data delayed, market "flying blind"; US dollar rebound, negative for cryptocurrencies
- Liquidity Drying Up
Over the past week, digital asset investment products saw net outflows of $1.7 billion. Since the start of 2026, cumulative outflows have reached $1 billion. The Head of Research at CoinShares said this "marks a significant deterioration in investor sentiment towards the asset class".
- Passive Liquidation Spiral
Since last Thursday, over $2 billion in Bitcoin long and short positions have been liquidated. Saturday alone saw liquidations of $2.56 billion, the 10th largest single-day liquidation event in history. Liquidations trigger a chain reaction: price drop → triggers forced liquidation → increased selling pressure → price drops further. This spiral is more deadly in the low-liquidity weekend market.
Where is Bitcoin's Next Stop?
From a technical perspective:
Current support level: $72,000-$70,000 range; If it breaks below $70,000, the next stop is $68,000; More pessimistic scenario: could correct to $58,000-$62,000.
From a fundamental perspective:
Trump's promised "strategic Bitcoin reserve" has seen no progress; Crypto regulation bills like the Clarity Act are progressing slowly; The Fed's hawkish turn (Warsh nomination) is negative for liquidity.
Market Sentiment:
Fear & Greed Index: 14 (Extreme Fear); RSI nearing oversold territory, but not at extremes; Year-to-date, Bitcoin is down 16%.
Precious Metals: Epic V-Shaped Reversal
Spot gold settled around $4,991/oz, up over 5% on the day. It once broke above $5,016 during the session. This is the largest single-day gain since November 2008.
Silver also rebounded strongly, rising nearly 10% to around $87.
Why the V-shaped reversal for gold?
"Warsh Panic" digested.
Last Friday, Trump nominated Warsh for Fed Chair, triggering a historic gold crash (down 11% in a day). The market's first reaction was panic selling: Warsh = Hawkish → Rates stay high → Dollar strengthens → Gold loses appeal.
But today, investors started reassessing:
Warsh won't take office until May at the earliest, the current panic is overdone; Even if Warsh is hawkish, he can't ignore economic data; The market still expects two rate cuts in 2026.
Gold fell from $5600 to $4400, a drop of over 20%. This crash washed out leveraged speculators and created a "golden pit".
Long-term investors and central banks started buying the dip.
JPMorgan reiterated today: 2026 year-end gold target of $6300, calling the current pullback a "high-value re-accumulation opportunity".
Furthermore, the January Nonfarm Payrolls report, originally scheduled for this Friday, was postponed (due to partial government shutdown). This left the market without its most important economic data reference, increasing uncertainty. Uncertainty = Gold's friend.
Overall, gold's long-term logic remains unchanged.
Today's rebound is not a "dead cat bounce" but genuine buying supported by fundamentals:
Global central banks continue buying gold (800 tons expected in 2026); Long-term US dollar depreciation pressures persist; Global "de-dollarization" trend is irreversible; US national debt at $38 trillion, fiscal discipline collapse triggers a crisis of confidence in fiat currency.
JPMorgan, Deutsche Bank both believe gold will rise to $6000-$6300 this year. Near $5000 currently, there's still 20%+ upside.
The Market's Core Contradiction: AI Bubble vs. Economic Resilience
Today's market action exposed a deep contradiction:
On one hand, the AI narrative for tech stocks is being questioned. The software stock crash, Nvidia's hurdles, PayPal's plunge all say the same thing: the pace of AI commercialization can't keep up with the frenzy of capital expenditure. Tech giants are expected to spend $440 billion in capex in 2026; if this investment doesn't generate corresponding returns, the bubble will burst.
On the other hand, traditional economic sectors held firm. Verizon, Cisco, Walmart all rose over 2% today. The Dow fell only 0.34%, much better than the Nasdaq's 1.43%. This shows the economy's foundation isn't collapsing; the market is just repricing tech stock valuations.
Cryptocurrency is caught in the middle: it's neither a true safe-haven asset (gold surged while Bitcoin crashed), nor a pure risk asset (US stocks are just correcting, Bitcoin is in a winter). This "unwanted by both" situation makes the crypto market the most vulnerable sector right now.
Key Things to Watch for the Rest of the Week
Wednesday-Thursday: Tech Giant Earnings
- Amazon, Alphabet (Google)
If these earnings disappoint, tech stocks could crash further. If they beat expectations, they might temporarily stabilize market sentiment.
Friday (if released): Nonfarm Payrolls Data
Currently postponed due to government shutdown. Once released, it will be key for judging whether the Fed will cut rates in March.
Geopolitics:
- US-Iran talks on Friday
- Ukraine peace talk progress
Any deterioration would boost safe-haven assets (gold) and pressure risk assets (stocks, crypto).
