Crypto Market Drops: BTC and ETH Slide as Regulatory Uncertainty Rises

I. Crypto Market Overview

Key Takeaways

Macro Environment

The US government shutdown has halted SEC crypto operations, intensifying market volatility and stalling ETF reviews. The OECD's new Crypto Asset Reporting Framework is increasing global tax compliance pressure, impacting offshore liquidity. The European Commission's enforcement on crypto tax transparency adds regulatory uncertainty for cross-border transactions.

Crypto Market

The crypto market saw broad declines over the past 12 hours, with BTC down 5.22% to $78,007 and ETH dropping 8.80% to $2,369, pressured by ETF outflows and weak spot demand. Most major altcoins, including SOL (-7.97%), BNB (-7.62%), and XRP (-2.24%), also fell. LayerZero (ZRO) outperformed, rising 3.31% on strong cross-chain protocol interest, while Flare (FLR) gained 2.36% amid steady network usage. JUST (JST) lagged, down 4.59%, as DeFi activity cooled.

Today's Outlook

Today's key events include the release of US January Average Hourly Earnings data, providing insight into wage growth and inflation trends. Web Summit Qatar 2026 opens, gathering over 30,000 tech and crypto leaders, potentially driving sector headlines and institutional sentiment.

Fear and Greed Index

10.00% Annual Percentile

26 Fear

Total Crypto Market Cap

$2.64T

5.10%

Total Market Trading Volume

$191.55B

50.89%

Altcoin Season Index

0.00%

Quarterly Percentile

26 / 100

Total Futures Market Open Interest

3.34B

2.62%

Futures

581.44B

6.46%

Perpetuals

II. Industry Updates

Macro-economic Policies

The U.S. government shutdown has halted SEC crypto operations, causing Bitcoin to drop 7% and Ethereum to fall below $3,000, intensifying market volatility and liquidations.

The OECD has advanced its Crypto Asset Reporting Framework, increasing global tax compliance pressure and prompting large crypto holders to adjust positions, impacting offshore liquidity flows.

The European Commission issued infringement notices to 13 EU states for failing to meet crypto tax transparency requirements, raising uncertainty for cross-border crypto transactions and DeFi flows.

Gold is increasingly favored as a hedge against declining dollar dominance, driving structural demand and influencing capital allocation away from crypto during periods of macroeconomic stress.

Federal Reserve Chair Powell declined to confirm his future at the Fed, fueling speculation on U.S. monetary policy direction and adding uncertainty to crypto market rate expectations.

Cryptocurrency Regulatory Trends

The U.S. government shutdown has forced the SEC to halt most crypto-related operations, freezing ETF reviews and stalling regulatory guidance, which has triggered sharp market volatility and a 7% drop in Bitcoin.

The OECD has advanced its Crypto Asset Reporting Framework (CARF), requiring global crypto platforms to report detailed transaction data, increasing compliance risks for holders of undeclared offshore assets and intensifying tax scrutiny.

The European Commission has issued infringement notices to 13 EU states for failing to comply with MiCA and crypto tax transparency rules, raising the risk of enforcement actions and regulatory uncertainty in the European crypto market.

The SEC has issued new guidance on tokenized equities, clarifying how U.S. securities laws apply to onchain stocks and bonds, paving the way for regulated crypto securities and boosting U.S. leadership in financial tokenization.

India's 2026 budget introduces penalties for inaccurate or missing crypto income tax reporting, signaling stricter enforcement and potentially increasing compliance costs for domestic crypto investors and platforms.

JUST (JST): JST rose 3.75% in 24h with $41.18M trading volume, driven by strong DeFi activity on TRON and increased user engagement, but no major new event reported.

Flare (FLR): FLR gained 3.44% in 24h with $10.07M volume, supported by ongoing Layer 1 interoperability demand and steady network usage, without a specific catalyst in the last 24h.

LayerZero (ZRO): ZRO climbed 3.11% in 24h with $130.6M volume, reflecting continued interest in cross-chain messaging protocols, though no significant news or upgrade was identified in the past day.

Smart Money Movements

BitMine increased its Ethereum holdings by 40,302 ETH, bringing its total to 4.24 million ETH, but now faces over $6 billion in unrealized losses as ETH prices dropped to $2,400.

A Bitcoin whale suffered a $128 million loss after a major long position liquidation, reversing previous gains of over $142 million on Hyperliquid.

The Bhutan Sovereign Wealth Fund sold 25,816 stETH during an ETH price dip, using proceeds to repay Aave loans in USDT and maintaining a health ratio of 1.10, with 78,246 stETH still held.

Ethereum spot ETFs saw a net outflow of $327 million this week, led by BlackRock's $264 million exit, reducing total ETF net asset value to $15.86 billion.

The whale '0xFB7' acquired an additional 10,000 ETH for $26.36 million from WinterMute, increasing total holdings to 120,169 ETH valued at $294.79 million in staking.

Events to Watch

Feb 1 (Sun)

US January Average Hourly Earnings data releases, indicating wage growth trends; Web Summit Qatar 2026 opens, gathering 30,000+ tech and crypto leaders.

Feb 2 (Mon)

US S&P Global Manufacturing PMI, ISM Manufacturing PMI, and ISM Manufacturing Prices for January release, providing key economic signals.

Feb 3 (Tue)

Atlanta Fed GDPNow estimate and South Korea January CPI data release, offering insights into US growth and Asian inflation trends.

Feb 4 (Wed)

US Federal Reserve meeting concludes, with markets expecting a rate cut; US January ADP private-sector employment change and Services PMI data release.

Feb 5 (Thu)

BoJ policy announcement; UK rate decision; US ISM Non-Manufacturing PMI, initial jobless claims, and major token unlocks: XDC (841.18M), BERA (63.75M).

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