#GlobalTechSell-OffHitsRiskAssets How the February 2026 Tech Rout Is Driving a Global Risk-Off Cycle — and Why Crypto Feels It Most

The global technology sell-off in early February 2026 has been swift, aggressive, and highly disruptive, sending shockwaves through risk assets worldwide. Cryptocurrencies, in particular, are behaving like a leveraged extension of Nasdaq growth stocks, amplifying both fear and volatility. What we are witnessing is not random chaos, but a classic risk-off rotation driven by valuation stress, leverage unwinds, and shifting macro expectations.
📉 The Tech Sector Carnage — Updated Market Reality
The Nasdaq Composite has been at the center of the downturn. From late January into early February, selling pressure intensified sharply. On February 5, the index closed near 22,540 after a steep single-day decline of roughly 1.6%, marking one of its worst sessions in months. Several consecutive sessions posted losses between 1.8% and 2.5%, comparable in severity to major pullbacks seen during past macro shocks.
Year-to-date, tech-heavy benchmarks — including the Nasdaq 100, semiconductor indices, and software-focused ETFs — are down between 8% and 14%. Software and AI-exposed companies have been hit hardest, with many leading names down 18% to 30% from their 2025 highs. Trillions of dollars in market capitalization have been erased in a short period.
The primary catalyst has been rising concern over artificial intelligence disrupting traditional software business models. New-generation AI tools are threatening established SaaS revenue structures, while massive capital expenditures on AI infrastructure are raising doubts about near-term profitability. This combination triggered a “software-led sell-off,” wiping out nearly $1 trillion in value from software-related equities.
A relief rally followed on February 6–7, with the Nasdaq gaining over 2%, the S&P 500 rising about 2%, and the Dow recording one of its strongest sessions on record. While dip buyers stepped in aggressively, the broader trend remains fragile, with weekly performance still negative.
📊 Why Tech Controls Global Risk Sentiment
Technology stocks remain the backbone of global risk appetite. Institutional portfolios are heavily weighted toward growth and AI-related assets, while retail investors continue to view tech as the future of innovation and wealth creation. When tech rallies, high-beta sectors follow. When it declines, fear spreads rapidly.
Bitcoin’s correlation with the Nasdaq has surged during recent risk-off phases, often reaching extreme levels in short-term windows. While longer-term correlations fluctuate, during periods of stress, price movements tend to synchronize. This reinforces crypto’s role as a high-volatility extension of equity risk.
The current environment reflects a textbook rotation into safety. Capital is moving away from volatile assets and toward gold, government bonds, defensive equities, and cash. There is no single catastrophic trigger. Instead, stretched valuations, leverage unwinds, slower Fed easing expectations, negative ETF flows, a strong US dollar, and geopolitical uncertainty have converged.
₿ Bitcoin & Crypto — The Amplifier of Market Stress
Bitcoin has absorbed the shock more violently than most asset classes.
After peaking near $126,000 in October 2025, BTC fell to the $60,000–$62,000 region, representing a drawdown of more than 50%. On February 5, Bitcoin recorded its largest single-day decline since 2022, dropping between 12% and 15% and briefly breaking below $61,000.
By February 7, BTC had rebounded into the $69,900–$70,500 range, posting a strong short-term recovery of over 10%. However, this bounce emerged from deeply oversold conditions rather than renewed structural strength.
The broader crypto market lost between $1.2 trillion and $2 trillion in capitalization from its 2025 peak. Altcoins suffered even more severely, with many declining 65% to 85% from highs. Excessive leverage magnified the downturn, with over $1.8 billion to $3.2 billion in liquidations occurring within three days.
Negative funding rates, forced liquidations, and collapsing liquidity created a self-reinforcing cycle. Panic selling accelerated as volume surged to multiples of normal levels. Below $70K, liquidity thinned rapidly, allowing prices to fall until strong buyers emerged near $60K–$62K.
In effect, Bitcoin has been trading like leveraged tech — suffering disproportionately when enthusiasm around AI and growth weakens.
🌐 Macro Forces Adding Pressure
Macroeconomic conditions have intensified market stress.
The Federal Reserve’s more cautious stance has reduced expectations for near-term rate cuts, reinforcing “higher-for-longer” concerns. Negative spot Bitcoin ETF flows have removed institutional support. Meanwhile, a stronger dollar, volatile commodity markets, and geopolitical risks have added uncertainty.
This is not a crisis driven by a single failure. It is the result of valuation compression, leverage unwinding, and rising caution occurring simultaneously.
🔍 Bottom Line — What Comes Next
This is not a crypto-only crash. It is a global repricing of risk led by technology stocks, with crypto absorbing the largest impact due to its leverage and sentiment-driven nature.
Historically, these extreme fear phases often coincide with important transition points in Bitcoin cycles. Weak hands exit under pressure, while patient capital begins to accumulate quietly. Major trend reversals frequently emerge after clear selling exhaustion.
The recent rebound — with BTC returning toward $70K and equities surging — shows that dip buyers remain active. However, the recovery is still fragile and requires sustained volume, improving macro signals, and renewed institutional participation.
Key levels and indicators to watch include Nasdaq technical support, Bitcoin holding the $68K–$70K zone, ETF flow trends, and shifts in Federal Reserve expectations. These factors will determine whether the current rebound evolves into a durable recovery or remains a temporary relief rally.