Crypto Market Extends Correction; SEC Says Tokenized Securities Are Regulated
The crypto market extended a broad correction on Jan. 29, 2026, with major tokens and sectors showing widespread weakness. Bitcoin slipped below $89,000 (down ~0.8%) and Ethereum fell under $3,000 (down ~0.6%). Sector gains earlier in AI, real-world assets (RWA) and centralized finance (CeFi) faded, leaving Layer 1, Layer 2, DeFi, PayFi and memecoins under pressure. Notable individual token moves included gains in Worldcoin, Kite and Jito, but these did not offset the market-wide selling. Key regulatory and institutional developments: the U.S. Securities and Exchange Commission clarified that tokenized securities are subject to existing federal securities laws and must meet the same registration, disclosure and compliance obligations as traditional securities. Coinbase Markets added Infinex (INX) to its asset listing roadmap, contingent on market-making and technical readiness. Sony Innovation Fund led a $13M Series A tranche into Startale Group, co-developer of the Soneium Ethereum layer-2, bringing Startale’s disclosed funding to $20M. For traders: expect heightened sensitivity to regulatory news (tokenization guidance) and selective volatility around tokens tied to the mentioned projects (INX, WLD, KITE, JTO). Market breadth is negative, so short-term risk is elevated — traders should manage leverage, watch liquidity on major exchanges, and monitor responses to SEC guidance which could reclassify or constrain tokenized instruments.
Bearish
The coverage highlights a broad market correction with major cap tokens declining (BTC < $89k, ETH < $3k) and multiple sectors (Layer 1/2, DeFi, memecoins) under selling pressure. That distribution of weakness suggests diminished risk appetite and lower market breadth, conditions typically associated with near-term downside or range-bound trading. The SEC guidance confirming tokenized securities are subject to federal securities laws adds regulatory risk: it raises compliance costs and could reduce liquidity/innovation for tokenized products, increasing uncertainty for institutional and retail participants. Coinbase’s INX roadmap addition and Sony-backed Startale funding are constructive but idiosyncratic and unlikely to offset systemic selling. Historically, similar regulatory clarifications (e.g., SEC enforcement actions or guidance) have produced short-term volatility and sell-offs as traders de-risk until legal clarity emerges. Therefore, the immediate impact is bearish — expect elevated volatility, selective sell pressure on tokenized and compliance-sensitive assets, and cautious short-term positioning. Over the medium-to-long term, clearer regulation can be constructive if it leads to defined frameworks and institutional participation, but that depends on implementation details and enforcement approach.