Bitcoin (BTC) fell back below $74,000 during the early U.S. trading session, with a bounce from Tuesday's lows quickly fading. The decline was attributed to broader weakness in the technology sector, which weighed heavily on cryptocurrency markets. The Nasdaq 100 was down 1%, following a 1.5% decline the previous day. The software sector continued its significant tumble, with the iShares Expanded Tech-Software ETF (IGV) declining another 4%, now down 17% in just over a week. This sell-off was fueled by fears that artificial intelligence (AI) will be severely disruptive to existing tech companies.
Crypto mining stocks, increasingly tied to AI infrastructure buildout, mirrored the slide. Cipher Mining (CIFR), IREN, and Hut 8 (HUT) all fell by more than 10%. The declines stemmed from chipmaker AMD, which plunged 14% after its 2026 outlook missed analysts' expectations. Gold was also caught in the selling, quickly reversing an overnight surge to $5,113 per ounce and sliding back below $5,000.
U.S. economic data presented a mixed picture. The ISM Services PMI for January held steady at 53.8, matching December's revised reading and slightly beating expectations, indicating continued expansion in services. However, private job growth slowed sharply. An ADP report showed just 22,000 jobs added, well below forecasts of 48,000 and December's already weak 37,000. The government's official January jobs report has been delayed until next week due to a short government shutdown.
"Manufacturing has lost jobs every month since March 2024 (Main Street recession) but this month professional and business services and large employers joined the weakness," said Lekker Capital CIO Quinn Thompson, who believes markets are underestimating the amount of Federal Reserve stimulus that may be coming in 2026.
Analysts are now warning that Bitcoin could see further downside, with the $60,000–$65,000 range viewed as a realistic floor. This would represent a typical 50% correction for Bitcoin cycles. Tanisha Katara, a blockchain governance consultant, stated, "$60,000–$65,000 is a realistic floor, and that's where real buyers historically show up. It represents roughly a 50% drawdown, which is brutal but normal for Bitcoin corrections." She dismissed predictions of a drop to the $30,000–$35,000 range as "ridiculous and baseless."
Katara and other analysts pointed to macro pressure and geopolitics as key drivers, reinforcing Bitcoin's role as a risk asset in the short term. "Trump's tariffs triggered a risk-off move across global markets. Leverage was wiped out, followed by $1.6 billion in monthly ETF outflows. This combination created selling pressure for BTC and other crypto assets," Katara explained.
Gavin Thomas, CEO of TEN Protocol, emphasized that for Bitcoin to break significantly below $60,000, there would need to be a "strong upshift in panic selling," which he sees as less likely given the behavior of long-term holders. Looking ahead, Thomas expects February to remain challenging, marked by industry-wide caution, cost-cutting, and limited activity due to ongoing geopolitical uncertainty.
