Wiped Out: $2 Trillion Crypto Loss Meets 17-Year Peak in U.S. Layoffs

The Asia-Pacific financial landscape is currently weathering a significant downturn, evidenced by the MSCI index (excluding Japan) retreating by 1% for its second day of decline. The most dramatic movement occurred in South Korea, where the Kospi’s 5% collapse necessitated temporary trading halts. According to IG market analyst Tony Sycamore, this instability stems from investors losing faith in the primary catalysts of recent growth: artificial intelligence, precious metals, and digital currencies. This erosion of confidence suggests that the market may be on the verge of an even more profound correction.

A major driver of this retreat is the shifting sentiment regarding AI. While previously seen as a profit engine, there is growing anxiety that the massive infrastructure costs required for new models will erode corporate margins. For instance, Amazon witnessed an 11.5% drop in after-hours trading following news that its 2026 capital expenditures would surge by over 50%. Alphabet faced similar pressure due to its projected $185 billion capital budget for 2026, largely dedicated to AI. Meanwhile, Qualcomm saw its valuation slide by more than 8% amid a global memory shortage and lackluster forward-looking statements.

Broader economic concerns are also weighing on investor sentiment, particularly regarding the cooling labor market. Data from Challenger, Gray & Christmas indicates that January layoffs reached a 17-year peak. Furthermore, an unexpected rise in weekly jobless claims at the end of January has fueled fears that the previous period’s employment strength—which hit a multi-year low in December—is rapidly fading.

The cryptocurrency sector has not been spared from this flight from risk. Bitcoin recently plunged to a 16-month low of approximately $60,000, its weakest valuation since late 2024. The premier digital asset is facing a 16% weekly loss, contributing to a 27% decline since the start of the year, while Ether has fared even worse with a 36% year-to-date drop. Joshua Chu of the Hong Kong Web3 Association notes that this volatility mirrors corrections seen in gold and silver, arguing that the crash is a consequence of excessive leverage and poor risk management rather than a failure of the technology itself. This bearish trend is underscored by data from Deutsche Bank, which revealed that US spot Bitcoin ETFs saw $3 billion in outflows in January, continuing a massive liquidation trend that began in late 2025.