US Stocks Close Lower as Extreme Fear Grips Crypto Market

VADODARA, February 5, 2026 — The three major U.S. stock indices closed sharply lower today, triggering a correlated sell-off in digital assets. According to primary market data, the S&P 500 fell 1.2%, the Nasdaq dropped 1.59%, and the Dow Jones declined 1.2%. This traditional market weakness coincided with Bitcoin plunging to $64,291, down 12.37% in 24 hours, as the Crypto Fear & Greed Index hit 12/100, signaling Extreme Fear. This daily crypto analysis examines the synchronous breakdown and its implications for market structure.

Investigation: Synchronized Equity and Crypto Sell-Off

Market data confirms a broad-based risk-off event on February 5, 2026. The S&P 500, Nasdaq, and Dow Jones all posted significant losses, with the tech-heavy Nasdaq leading declines. This equity weakness directly pressured cryptocurrency valuations. Bitcoin's price action mirrored the downturn, erasing recent gains and testing key technical supports. On-chain liquidity maps from Glassnode indicate substantial selling pressure from short-term holders, exacerbating the drop. The simultaneous moves suggest a macro-driven liquidity grab, not an isolated crypto event.

Market Context & Historical Precedent

Historically, correlations between equities and crypto intensify during risk-aversion phases. Similar to the 2021 correction, where both asset classes sold off amid inflation fears, today's action reflects a macro contagion effect. In contrast, the 2023 rally saw decoupling as crypto outperformed. Underlying this trend, the Federal Reserve's monetary policy stance often acts as a common driver. According to the Federal Reserve's historical data, tightening cycles typically pressure risk assets. This context frames the current sell-off as part of a broader liquidity withdrawal cycle.

Related developments in crypto markets highlight the Extreme Fear environment:

• Massive futures liquidations exceeding $450 million have occurred recently, amplifying volatility.
• Bitcoin previously rallied amid fear contradictions, suggesting sentiment extremes can precede reversals.

Technical Architecture & Price Action

Market structure suggests Bitcoin is testing a critical Fair Value Gap (FVG) between $62,000 and $65,000. This zone aligns with the Fibonacci 0.618 retracement from the 2024 all-time high, a level that historically acts as strong support. The Relative Strength Index (RSI) on daily charts is approaching oversold territory, indicating potential for a short-term bounce. However, volume profile analysis shows increased selling volume, confirming bearish momentum. A break below the $62,000 Order Block would invalidate the current bullish structure and target lower supports near $58,000.

By The Numbers

Why It Matters

This synchronous decline matters because it signals a macro-driven risk-off event, not just crypto-specific weakness. Institutional liquidity cycles are tightening, as evidenced by equity outflows. Retail market structure is fragile, with high leverage in crypto futures amplifying losses. Real-world impacts include potential margin calls and deleveraging across portfolios. On-chain data indicates increased movement from long-term holders to exchanges, a bearish signal for supply dynamics. This environment tests the resilience of digital assets as uncorrelated hedges.

Expert Commentary

"The correlation spike between stocks and crypto the dominance of macro liquidity over niche narratives. When the Fed withdraws liquidity, all risk assets suffer. Current on-chain metrics show capitulation from weak hands, which often precedes a stabilization phase, but only if macro conditions permit." — CoinMarketBuzz Intelligence Desk

Market Outlook & Price Scenarios

Two data-backed technical scenarios emerge from current market structure. First, a bullish reversal requires holding the $62,000 Fibonacci support and reclaiming $68,000 resistance. Second, a bearish continuation would see a break below $62,000, targeting the $58,000 support zone. Historical cycles suggest Extreme Fear readings often mark local bottoms, but confirmation requires price action.

• Bullish Invalidation Level: $68,000. Bitcoin must break and hold above this level to invalidate the current downtrend and signal a reversal toward $72,000.
• Bearish Invalidation Level: $62,000. This Fibonacci 0.618 support must hold to maintain any bullish structure; a daily close below targets $58,000.

The 12-month institutional outlook hinges on macro liquidity. If the Federal Reserve pivots to easing, both equities and crypto could rally sharply. Conversely, prolonged tightening may extend the correlation and pressure valuations. This aligns with a 5-year horizon where crypto maturation increases sensitivity to traditional finance cycles.