Global Markets Mixed After Technology Selloff; Bitcoin Plummets to 16-Month Low

The February 5, 2026 market action represents a significant inflection point in global equity markets, characterized by intensifying pressure on technology valuations amid growing skepticism about artificial intelligence investment returns. According to the Wall Street Journal [1], U.S. futures and global markets were mixed as investors digested the tech selloff, with Nasdaq futures pointing higher in early trading suggesting potential stabilization following the sharp decline. The technology sector’s pronounced weakness reflects a fundamental reassessment of AI-driven growth narratives that have dominated market sentiment since 2023.

The selloff’s breadth extended beyond technology into other growth-oriented sectors, with utilities experiencing the most severe decline at minus 4.58% [0]. This pattern suggests that the market repricing is not isolated to technology companies but represents a broader rotation away from momentum-dependent, high-valuation growth strategies toward more defensive and value-oriented exposures. The absence of historical dip-buying behavior—a characteristic feature of previous technology corrections—signals a potential regime change in market psychology that warrants close monitoring [4].

The U.S. equity markets demonstrated clear sector rotation patterns during the February 4-5 trading period. The NASDAQ Composite’s decline of 1.35% on February 4, following a 1.74% drop on February 3, reflects concentrated pressure on growth-oriented portfolios with significant technology exposure [0]. The index has fallen approximately 500 points from recent highs, representing a meaningful correction from levels that had been considered elevated by historical valuation metrics.

The Dow Jones Industrial Average’s relative resilience, gaining 0.36% while the broader market declined, indicates investor preference for economically sensitive, dividend-paying companies with established track records [0]. This divergence between the Dow and NASDAQ—the widest single-day spread in recent months—suggests a structural shift in capital allocation strategies rather than a temporary fluctuation. The Russell 2000’s 1.24% decline further confirms that small-cap growth stocks, which often serve as proxies for domestic economic optimism, are also experiencing selling pressure despite their historical correlation with U.S. economic growth expectations.

The sector performance data reveals a clear hierarchy of investor preferences during this period of repricing. Basic Materials emerged as the top-performing sector with a 1.35% gain, followed by Financial Services at 0.93% and Energy at 0.89% [0]. These sectors share common characteristics that appear attractive under current market conditions: exposure to global industrial demand, tangible asset bases, and relatively moderate valuation multiples compared to technology counterparts.

Healthcare’s modest 0.25% gain reflects its traditional defensive characteristics, while the underperformance of Utilities at minus 4.58% and Technology at minus 2.00% underscores the market’s rejection of highly levered, capital-intensive growth models [0]. Consumer Cyclical’s 1.31% decline and Industrials’ 0.53% decline suggest that the rotation is not universally toward safety but rather toward specific risk-adjusted return profiles that balance growth potential with valuation discipline.

The technology sector’s weakness is particularly acute in software and services companies, which have faced mounting pressure from multiple vectors. Since January 28, approximately $830 billion in market value has been erased from the software and services sector, with the S&P 500 Software & Services Index falling nearly 13% over six consecutive trading sessions [4]. More significantly, the index has declined 26% from its October 2025 peak, suggesting that the current correction represents a meaningful retrenchment rather than a temporary fluctuation.

The absence of dip-buying activity—a hallmark of previous technology sector corrections—represents a notable departure from historical patterns that has attracted the attention of market analysts [4]. This behavioral shift may reflect growing investor sophistication regarding valuation discipline, concerns about the sustainability of AI-driven revenue growth projections, or simply exhaustion of available capital from previous accumulation phases.

Bitcoin’s collapse to approximately $73,000 represents a critical technical and fundamental support breach that has significant implications for cryptocurrency markets and related corporate strategies. According to multiple market analyses [2][3], this represents Bitcoin’s lowest level in 16 months and marks the first time since October 2023 that the cryptocurrency has traded below its realized market value of approximately $80,700. The realized price, calculated as the average purchase price of all Bitcoin holders, serves as a key indicator of aggregate cost-basis support.

The derivatives market experienced significant stress during this period, with approximately $800 million in positions being liquidated as prices declined [3]. Market depth—a measure of liquidity and order book resilience—remains more than 30% below October 2025 peaks, suggesting reduced capacity to absorb selling pressure without substantial price impact [3]. The cryptocurrency’s correlation with equity markets, which had strengthened in recent months, appears to be breaking down in ways that complicate portfolio hedging strategies for institutional investors.

The Bitcoin price decline has created unprecedented stress for corporate treasury strategies that accumulated cryptocurrency during the 2024-2025 boom period. Strategy (MSTR), the most prominent corporate Bitcoin holder with approximately 700,000 BTC valued at roughly $52 billion at peak prices, has seen its Bitcoin holdings fall below the company’s average cost basis of $76,037 [3]. This represents the first time Strategy’s entire Bitcoin position has gone underwater, creating significant mark-to-market losses and potentially triggering changes to the company’s premium-to-net asset value ratio.

The implications extend beyond Strategy to other corporate Bitcoin holders and to the broader question of cryptocurrency as a treasury reserve asset. Galaxy Digital’s reported connection to a $9 billion Bitcoin whale movement highlights the concentrated nature of cryptocurrency holdings and the potential for large-scale position liquidations to exacerbate price declines [7]. Treasury Secretary Scott Bessent’s statement that the government would not bail out Bitcoin adds a policy dimension that may be influencing market psychology [6].

The technology sector selloff is closely linked to growing concern that AI-driven tools may compress valuations across software, data, and analytics companies rather than deliver incremental revenue growth. According to BNN Bloomberg [5], the repricing reflects four primary concerns: the massive capital intensity of AI infrastructure investments with uncertain return profiles; the potential commoditization of AI capabilities as the technology becomes more普及ized; margin pressure from rising operational costs associated with AI compute requirements; and competitive dynamics that could erode pricing power for established software vendors.

The Anthropic-related developments referenced in Reuters coverage [4] have served as a catalyst for broader sector reevaluation, prompting investors to question whether AI disruption will ultimately benefit existing software incumbents or create new competitive threats. This reassessment is occurring against a backdrop of escalating corporate spending on AI infrastructure, with companies reporting significant capital expenditure increases that have yet to demonstrate commensurate revenue acceleration.

The integrated analysis reveals several cross-domain correlations and deeper implications that emerge only when examining multiple market segments together. First, the simultaneous decline in both high-valuation technology stocks and Bitcoin suggests a broader repricing of “digital asset” narratives that have dominated investment themes since 2023. Both asset classes share characteristics—growth dependence, future cash flow reliance, and speculative positioning—that appear to be falling out of favor with institutional investors.

Second, the sector rotation toward Basic Materials, Energy, and Financial Services indicates that investors are seeking real assets and economically sensitive exposures as a hedge against technology sector volatility [0]. This rotation pattern has historically preceded or accompanied periods of economic optimism, suggesting that market participants believe the AI disruption thesis is being appropriately priced rather than invalidated.

Third, the absence of historical dip-buying behavior represents a potentially significant structural change in market dynamics [4]. If sustained, this behavioral shift could reduce the amplitude of future technology sector rallies while simultaneously increasing the frequency and depth of corrections—a dynamic that would fundamentally alter risk-return profiles for growth-oriented investment strategies.

Fourth, the stress on corporate Bitcoin strategies like Strategy’s highlights the risks of concentration in volatile asset classes for public companies [3]. The potential for corporate Bitcoin holdings to transition from premium-to-NAV to discount-to-NAV status could have implications for debt covenants, credit ratings, and shareholder relations that extend well beyond the cryptocurrency market itself.

The analysis identifies several elevated risk factors that warrant attention from market participants. The technology sector’s concentration risk remains significant, with the NASDAQ’s sharp decline indicating that portfolios with heavy technology exposure continue to face substantial volatility [0]. The software sector’s 26% decline from its October peak suggests structural weakness that may persist beyond a simple correction.

Cryptocurrency market distress presents elevated risk to both direct investors and to corporate balance sheets [2][3]. Bitcoin’s breach below realized price—a level that has historically served as strong support—signals potential for continued downward momentum. The Galaxy Digital whale movement and ongoing derivatives liquidations suggest that selling pressure may not be fully absorbed at current levels [7].

The AI investment thesis repricing creates moderate risk for companies that have aggressively pursued AI capabilities without clear return-on-investment pathways [5]. The disconnect between capital expenditure commitments and near-term revenue generation may prompt additional margin compression and valuation adjustments as quarterly results incorporate these investments.

The sector rotation toward Basic Materials and Energy presents potential opportunity for investors seeking defensive exposure with economic sensitivity [0]. These sectors have demonstrated relative resilience during the technology sector repricing while maintaining linkages to global industrial demand that could benefit from infrastructure spending initiatives.

The valuation compression in software and services companies may create entry points for investors with longer time horizons who believe the AI disruption thesis ultimately benefits rather than harms established software vendors [4]. The current discount from October peaks—while painful for recent investors—may represent attractive valuations for buyers with appropriate risk tolerance and investment horizon.

The corporate Bitcoin distress creates potential opportunities for cryptocurrency-focused investors who believe the fundamental value proposition remains intact despite temporary price weakness. The forced selling from distressed holders often creates generational buying opportunities for patient capital, though the timing and magnitude of any recovery remain uncertain [3].

The market data indicates that the February 5, 2026 action represents a significant inflection point characterized by technology sector repricing amid AI cost concerns, a critical Bitcoin support breach that has implications for corporate treasury strategies, accelerating sector rotation toward real assets and value exposures, the absence of historical dip-buying behavior suggesting potential regime change, and stress on corporate Bitcoin holdings particularly for Strategy’s concentrated position. Decision-makers should monitor Federal Reserve communications regarding technology valuations, upcoming earnings reports from major AI-exposed companies, cryptocurrency market stability indicators including derivatives liquidation patterns, and corporate strategy responses to mark-to-market losses as the situation develops.