Crypto World
Capital Rotation vs Capital Exit in DeFi Markets
One of the most misunderstood dynamics in DeFi is the difference between capital rotation and capital exit. When prices stall or certain narratives cool off, the default reaction on Crypto Twitter is to declare that “liquidity is leaving.”
Most of the time, that’s just… wrong.
What’s usually happening is not an exodus — it’s a rotation.
Understanding this distinction is critical for builders, investors, and traders who want to survive beyond the hype cycle and actually position themselves where liquidity is going, not where it’s already been.
What Capital Exit Really Looks Like
Capital exit occurs when funds leave the DeFi ecosystem entirely. This typically shows up as:
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Stablecoins moving off-chain to CEXs and then into fiat
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Sustained drops in Total Value Locked (TVL) across multiple chains
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Reduced on-chain activity, fewer transactions, and declining fee revenue
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Liquidity providers fully unwinding positions instead of reallocating them
We saw clear capital exit during events like:
During true exits, nothing is spared. Blue chips bleed alongside long-tail protocols. Infrastructure starves. Innovation slows.
That is not what most “bearish” DeFi phases actually look like today.
Capital Rotation: The Default State of DeFi
Capital rotation happens when liquidity stays on-chain but moves between:
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Sectors (DEXs → LSDs → Perps → RWAs → InfoFi)
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Chains (Ethereum → Arbitrum → Base → Solana → back again)
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Risk profiles (high-yield farming → stable yield → delta-neutral strategies)
In rotation phases:
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TVL might look flat or even decline in specific protocols
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But stablecoin supply stays elevated
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Transaction volume remains healthy
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New protocols capture liquidity quickly
This is DeFi behaving like a living market, not a dying one.
Real Examples of Capital Rotation in Action
1. DEX Liquidity → Liquid Staking
After the initial AMM boom, liquidity rotated from DEX LPs into liquid staking protocols as users sought yield with less impermanent loss.
Key projects:
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Lido
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Rocket Pool
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Frax Ether (frxETH)
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StakeWise
ETH never left the ecosystem — it just stopped farming Uniswap pools and started earning validator yield instead.
2. Yield Farming → Perpetuals & Derivatives
As passive yields compressed, capital rotated toward protocols offering leverage, speculation, and fee-based rewards.
Notable projects:
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dYdX
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GMX
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Gains Network
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Vertex
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Aevo
Liquidity didn’t vanish — it moved from LP tokens into trading collateral.
3. Layer 1 to Layer 2 Rotation
Ethereum mainnet capital rotated heavily into rollups once users demanded lower fees and faster execution.
Examples:
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Arbitrum
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Optimism
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Base
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zkSync
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Starknet
This rotation pulled liquidity away from some Ethereum-native DeFi apps — but it stayed within the Ethereum security umbrella.
4. DeFi → Real World Assets (RWA)
As yields normalized, capital rotated into protocols offering exposure to off-chain yield sources.
Key RWA players:
Instead of leaving crypto for TradFi, liquidity brought TradFi on-chain. That’s rotation, not exit.
5. Passive Yield → Strategy & Automation Protocols
Users increasingly prefer optimized strategies over manual farming.
Capital flowed into:
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Yearn Finance
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Enzyme
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Sommelier
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Pendle
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Gearbox
Yield didn’t disappear — it got abstracted, packaged, and automated.
6. Narrative Rotation: Privacy, MEV, and InfoFi
Narratives themselves attract liquidity. As attention shifts, capital follows.
Examples:
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Privacy & MEV protection: Flashbots, Eden, CoW Protocol
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InfoFi & on-chain intelligence: Arkham, Dune, Nansen
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Automation & execution layers: Gelato, Keep3r, Autonolas
Liquidity often moves before the narrative fully forms on social media.
Why Rotation Is Healthy (and Necessary)
Capital rotation is a sign of:
If capital never rotated, DeFi would stagnate. Rotation is how weak designs get drained, and stronger primitives get funded.
Exit kills ecosystems.
Rotation refines them.
How to Tell Rotation from Exit (On-Chain Signals)
Look beyond price charts:
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Stablecoin supply on-chain
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Bridge inflows/outflows
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Fee generation across protocols
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Gas usage and transaction counts
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Where TVL is moving, not just shrinking
If money leaves one protocol and shows up in three others, that’s rotation.
If it leaves the chain entirely, that’s exit.
Final Thoughts
DeFi doesn’t die in dramatic explosions. It mutates.
Capital rotation is the market’s way of voting — quietly, continuously, and ruthlessly — on which ideas deserve liquidity next.
The mistake isn’t missing the top.
It’s assuming the money left when it simply changed seats.
If you’re watching carefully, rotation isn’t bearish.
It’s a roadmap.
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The Monero price is down about 2% over the past 24 hours and nearly 31% over the past month. Since peaking near $799 in mid-January, XMR has already fallen more than 65%. A rebound followed the drop to $276, pushing the price back toward the $330 area. At first glance, this looked like stabilization after heavy selling.
But a closer look tells a different story.
Bear Flag and Moving Averages Show the Downtrend Is Still Intact
On the daily chart, Monero is trading inside a bear flag structure.
A bear flag forms when the price drops sharply and then moves sideways or slightly higher in a narrow range. This pattern usually represents a pause before another decline, not a trend reversal. In XMR’s case, the fall from $799 to $276 created the flagpole. The recent XMR price consolidation is forming a flag.
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As long as the price remains inside this range, the dominant trend stays bearish. A breakdown below the lower boundary would likely trigger another major leg lower.
Trend indicators are reinforcing this view.
Exponential moving averages, or EMAs, are weighted price averages that give more importance to recent data. They help identify whether momentum is strengthening or weakening. When shorter-term EMAs fall below longer-term EMAs, it signals deteriorating trend strength.
Right now, Monero’s 50-day EMA is moving toward the 100-day EMA. At the same time, the 20-day EMA is drifting toward the 200-day EMA.
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These developing bearish crossovers suggest that short-term momentum continues to weaken relative to the broader trend. If these looming crossovers confirm while the XMR price flirts with the lower trendline of the flag, the breakdown theory would likely get validated.
Spot Flows Show Rebounds Are Being Used to Exit, Not Accumulate?
Exchange flow data reveals how investors are behaving during this consolidation.
In early February, Monero briefly showed strong outflows (buying pressure). During the week ending February 2, net outflows reached about $7.1 million. This suggested that some buyers were stepping in after the crash.
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But this support faded quickly.
By the week ending February 9, flows flipped to net inflows of around $768,000. More XMR was moving back onto exchanges than leaving them. This shift happened while the price dipped to $276 and then rebounded to the $327 zone.
This tells an important story. As soon as the price bounced, selling possibly resumed. Instead of holding for a recovery, many investors possibly used the rebound to reduce exposure. Loss exits replaced by accumulation.
When outflows turn into inflows during consolidation, it usually signals distribution. Supply is returning to the market. Without steady spot demand, rallies struggle to survive. This also explains why recent recoveries have been shallow. Buyers are not strong enough to absorb the returning supply.
With spot demand fading, the burden shifts to derivatives traders. But derivatives data show growing caution.
Falling Open Interest and Weak Funding Limit the XMR Recovery Potential
Derivatives markets provide insight into trader confidence and leverage. Open interest measures the total value of active futures contracts. Rising open interest shows that traders are building positions. Falling open interest shows that traders are closing positions and stepping away.
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In mid-January, Monero’s open interest stood near $279 million. By February 10, it had dropped to around $110 million. This represents a decline of more than 60%.
Such a sharp drop indicates that leverage is leaving the market. Traders are reducing risk rather than preparing for a major rebound.
At the same time, funding rates remain mildly positive. Funding rates reflect the cost traders pay to hold futures positions. When funding is positive, long traders are dominant. When it is negative, short traders dominate.
XMR’s funding remains slightly positive, meaning most remaining traders still lean bullish. But without rising open interest, this bias lacks conviction.
This combination is weak. Fewer traders are participating, yet optimism has not fully reset. It also limits the chance of a short squeeze. A short squeeze requires heavy bearish positioning. Without that pressure, upside accelerations are unlikely.
With leverage shrinking and spot buyers hesitant, the price lacks fuel for sustained recovery.
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Why $150 Is Becoming Key Target for the Monero Price
With technical, spot, and derivatives signals aligned, downside levels become increasingly important.
The first major support sits near $314. This area aligns with recent lows and the lower boundary of the bear flag. A decisive break below it would likely confirm continuation lower.
If $314 fails, downside opens quickly.
The next major demand zone is near $150, according to a key Fibonacci retracement level. A move from current levels toward $150 would represent another drop of more than 50%, consistent with the size of the first decline.
Below $150, deeper levels such as $114 and $88 exist. But $150 stands out as the first major zone where long-term buyers may realistically reappear, thanks to its psychological significance. That is why it has become the primary downside reference point.
For now, Monero remains trapped between weak demand and persistent supply. The bear flag shows consolidation, not recovery. Spot flows show selling, not accumulation. Open interest shows retreat, not confidence. Funding shows optimism without commitment.
To weaken and invalidate the bearish pattern, the Monero price must close above $350 and $532, respectively, on a daily candle close.
Institutional crypto exchange provider LMAX Group has unveiled Omnia Exchange, designed to allow users to seamlessly convert FX, crypto, stablecoins and other digital assets in one platform, the company said on Tuesday.
Described as a “a unified multi-asset infrastructure layer,” Omnia allows users to trade any asset directly against any other 24/7, without restrictions on size or type, and to settle on traditional rails or instantly on the blockchain, according to a press release.
LMAX’s cryptocurrency-focused business has long been a major player when it comes to institutional crypto trading, reporting $8.2 trillion in institutional volume last year.
Whereas LMAX Digital is an institutional crypto execution venue and custodian, focused on crypto-FX pairs, Omnia aims to bring FX, crypto, stablecoins and other digital assets under one roof, allowing any asset to be traded directly against any other (not just crypto vs fiat), a spokesperson for LMAX said via email.
LMAX CEO David Mercer said Omnia “crosses the rubicon” between traditional markets and digital marketplaces.
“Omnia Exchange is the foundation for a new paradigm in capital markets delivering the ability for institutions to exchange any asset, anytime, anywhere,” Mercer said in a statement. “By opening access to wholesale FX and digital asset markets globally, we’re removing barriers, reducing friction and unlocking liquidity. Institutions can exchange value as simply as sending a message, creating hyper-efficient capital.”
A recent deal between LMAX Group and Ripple to integrate the latter’s RLUSD reflects broader momentum behind stablecoins as tools for institutional market access, not just crypto-native use.
Let’s have a look at some numbers and try to understand where is the XRP price headed this week.
XRP returns above $1.4, but can it hold there?
Ripple (XRP) Price Predictions: Analysis
Key support levels: $1.4, $1
Key resistance levels: $1.6
XRP Price Reclaims $1.4
After the massive drop last Thursday, XRP recovered somewhat and returned above the support at $1.4. If this key level holds, buyers could retest the $1.6 resistance level in the future. Any failure there could see the price resume its downtrend.
Sellers Dominate
A review of the volume shows that sellers have been dominating since late December on the weekly chart. Worst, the selling volume has accelerated in early February, showing no signs of a change. However, increased sales volume could be the first step towards finding a bottom.
Daily RSI Bounces from Oversold Area
During the crash last week, the daily RSI reached 17 points, falling deep into the oversold area. Since then, this indicator snapped back above 30. As long as the daily RSI is under 50, the bias leans bearish.
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US spot Bitcoin exchange-traded funds (ETFs) extended a tentative rebound after attracting $371 million in net inflows last Friday, adding to signs that institutional demand may be stabilizing following weeks of sustained selling.
Spot Bitcoin (BTC) ETFs attracted a further $145 million in inflows on Monday as BTC hovered around $70,000, according to data from SoSoValue and CoinGecko.
The inflows have yet to offset last week’s $318 million of outflows and $1.9 billion in redemptions year-to-date, but the slowing pace of losses may point to a potential trend reversal for crypto investment products, according to CoinShares.
“Outflows slowed sharply to $187 million despite heavy price pressure, with the deceleration in flows historically signaling a potential inflection point,” CoinShares’ head of research, James Butterfill said in an update on Monday.
Early Bitcoin holders unfazed by institutional inflows, Bitwise says
Bitcoin’s growing institutional presence has not driven early investors out of the market, according to a senior executive at asset manager Bitwise, even as the ETF saw heavy outflows during the latest crypto sell-off that pushed BTC back toward October 2024 price levels.
Analysts at research firm Bernstein described the recent downturn as the “weakest bear case” in Bitcoin’s history, noting the absence of major industry failures typically associated with deeper crypto market stress.
Related: Only 10K Bitcoin at quantum risk and worth attacking, CoinShares claims
With no clear single catalyst behind the decline, some market watchers have linked the volatility to Bitcoin’s increasing institutionalization, including ETFs, and concerns that broader financialization could dilute the asset’s scarcity narrative.
Still, that shift has not meaningfully deterred early adopters, Bitwise chief investment officer Matt Hougan said in comments to Bloomberg ETF analyst Eric Balchunas.
Hougan acknowledged that a “cypherpunk, libertarian OG core” of Bitcoin supporters may be uncomfortable with the growing influence of large asset managers such as BlackRock, but described that group as a “shrinking minority.”
Many early investors are instead taking partial profits after large gains rather than exiting the market altogether, he said, adding that most remain invested even as new institutional buyers enter the space.
“They invested a few thousand dollars and ended up with millions,” Hougan said, adding:
“The vast majority are still in it, and they’re being augmented by new institutional investors. I think the story that most of OG crypto is giving up on the space just doesn’t align with the people that we talk to with the investors that are working with Bitwise.”
In line with a rebound in Bitcoin ETFs, spot altcoin ETFs also posted gains on Monday, with Ether (ETH) and XRP (XRP) seeing inflows of $57 million and $6.3 million, respectively, according to SoSoValue data.
Magazine: Bitcoin difficulty plunges, Buterin sells off Ethereum: Hodler’s Digest, Feb. 1 – 7
South Korea’s Financial Supervisory Service (FSS) has escalated scrutiny of major cryptocurrency exchange Bithumb following an unprecedented operational mistake in which the firm accidentally credited customers with tens of billions of dollars’ worth of Bitcoin.
Summary
- South Korea’s Financial Supervisory Service (FSS) has launched a full-scale investigation into Bithumb following a massive $43 billion Bitcoin “fat-finger” error.
- The incident stemmed from an internal operational mistake that temporarily credited users with Bitcoin far exceeding the exchange’s actual holdings.
- Regulators are examining Bithumb’s internal controls and IT systems, with potential penalties possible if violations are confirmed.
The investigation follows a striking error on February 6, 2026, when Bithumb, during a routine promotional event, inadvertently distributed 620,000 Bitcoin, worth roughly $40 billion to $44 billion at market prices, to users instead of the intended small cash rewards.
The mishap stemmed from an employee inputting payouts in Bitcoin (BTC) units rather than Korean won, leading to an explosion of overissued Bitcoin credits before the mistake was detected.
What happened in the Bithumb mistake
In a “Random Box” promotion designed to reward users with modest cash amounts, Bithumb’s payout system mistakenly issued Bitcoin due to a unit entry error, resulting in the colossal overshoot.
Within minutes, hundreds of users found massive sums of Bitcoin in their accounts, equivalent to 13–14 times Bithumb’s actual BTC holdings based on industry estimates.
The exchange acted swiftly to freeze affected accounts and block trading and withdrawals within about 35 minutes, recovering the vast majority of the missent tokens. Still, a small portion, representing millions in value, was sold or withdrawn before the controls took effect.
FSS investigation and regulatory response
Initially launching an emergency review, the FSS escalated its examination to a full-scale formal investigation. Bithumb was notified of the probe signalling a deep dive into what went wrong and whether internal controls violated the Virtual Asset User Protection Act or other regulatory standards.
FSS Governor Lee Chan-jin has emphasized that the episode revealed systemic weaknesses in internal control and electronic ledger systems at the exchange. Regulators are examining how an exchange with far fewer actual reserves was able to record and disburse phantom Bitcoin balances so rapidly.
Depending on what investigators find, the probe could lead to sanctions against Bithumb, including fines or even suspension of operations if negligence or legal violations are confirmed. The FSS has also noted that users who sold erroneously credited Bitcoin may be legally obligated to return it as unjust enrichment under current interpretations of Korean law.
Chainlink (CRYPTO: LINK) co-founder Sergey Nazarov argues that the current crypto downturn is not a replay of previous bear markets. Speaking on X on Tuesday, Nazarov noted that there have been no FTX-style collapses this time and pointed to a persistent wave of tokenized real-world assets that continues to grow despite price declines. Crypto market capitalization has fallen about 44% from its October all-time high of $4.4 trillion, with roughly $2 trillion leaving the space in just four months. He frames the cycle as a test of the industry’s progress: cycles reveal how far the ecosystem has advanced, and this downturn is exposing both resilience and a real-world asset narrative that could outlast speculative pricing.
Key takeaways
- The downturn lacks a single systemic event comparable to FTX-era collapses, suggesting improved risk management across institutions.
- Tokenized real-world assets (RWAs) are expanding on-chain, signaling a use case beyond mere price speculation.
- On-chain perpetuals and asset tokenization offer 24/7 markets, on-chain collateral, and real-time data that could drive institutional adoption.
- Chainlink’s credibility as a backbone for on-chain RWAs remains intact even as the broader market experiences weakness.
- Analysts and industry observers see a bifurcation between crypto prices and the growth trajectory of on-chain RWAs, potentially reshaping the industry’s value proposition.
Tickers mentioned: $BTC, $ETH, $LINK
Sentiment: Neutral
Price impact: Negative. A broad sell-off and outflows have pressured prices and market capitalization, even as on-chain RWA activity trends higher.
Market context: The current cycle unfolds amid a shifting risk environment, macro uncertainty, and ongoing debates about liquidity and regulation that influence both crypto assets and tokenized RWAs.
Why it matters
The argument that the bear market is not a monolithic crash but a spectrum of dynamics matters because it reframes what investors should watch. Nazarov emphasizes that the absence of large, systemic failures this cycle points to improved risk controls and more mature market infrastructure. In practical terms, this could translate into steadier liquidity provision, fewer cascading liquidations, and greater confidence in deploying capital through on-chain channels rather than off-ramp exits.
Central to this narrative is the acceleration of RWA tokenization. According to RWA.xyz, tokenized RWAs on-chain have surged by about 300% over the past 12 months, underscoring a use case that can prosper irrespective of crypto price cycles. The implication is clear: real-world assets—ranging from securitized notes to commodity-linked contracts—are becoming meaningful, on-chain stores of value and collateral concepts, not merely speculative bets. This trend could feed into broader institutional demand, as on-chain mechanisms offer transparency, auditability, and cross-border settlement capabilities that traditional markets take days or weeks to deliver.
Yet the market’s performance remains tethered to macro and sector-specific catalysts. LINK, the token associated with pricing data and oracle services, has faced sustained weakness, trading in bear-market territory after peaking earlier in the cycle. The dynamic illustrates a decoupling: while RWAs push forward in practical utility, the crypto market, including major assets like Bitcoin and Ethereum, can diverge for periods where macro sentiment dominates. In this context, on-chain RWAs could gradually displace some narrative weight away from pure price action toward real-world utility and risk-adjusted capital formation.
Institutional involvement is widely anticipated to hinge on the utility of these on-chain structures. Nazarov argues that the combination of perpetual markets, tokenized assets, and robust on-chain collateral is creating a more resilient foundation for institutions to experiment with crypto-enabled finance. The broader ecosystem benefits from infrastructure upgrades that enable risk management, settlement, and governance in a transparent, programmable environment. The takeaway is not that crypto prices must explode to prove value, but that the underlying systems—the oracles, the data streams, and the contractual primitives—are becoming indispensable to professional finance.
As markets digest these developments, some observers emphasize that the current sell-off is driven by factors outside the crypto sector. Analysts have framed the move as a wider market concern about AI equities, liquidity expectations under a potentially tighter policy regime, and shifts in liquidity leadership. While these external pressures complicate the price narrative, the on-chain RWA ecosystem appears to be advancing on its own trajectory, aligned with broader fintech adoption and cross-chain interoperability goals.
“If these trends continue, I believe what I have been saying for years will happen; on-chain RWAs will surpass cryptocurrency in the total value in our industry, and what our industry is about will fundamentally change.”
Not all bear markets are equal
Industry observers have framed this downturn as potentially less damaging to the core ecosystem than prior cycles. Bernstein analyst Gautam Chhugani described the Bitcoin bear case as historically weak, suggesting that the price action reflects a crisis of confidence rather than a structural breakdown. “The current Bitcoin price action is a mere crisis of confidence. Nothing broke, no skeletons will show up,” the note said. The takeaway is that the macro environment, not just isolated crypto incidents, is weighing on sentiment.
Other voices emphasize a more nuanced picture. For instance, market participants note that macro catalysts—ranging from interest-rate expectations to tech-sector dynamics—have a disproportionate influence on crypto pricing versus on-chain activity. The sell-off has been described as being driven more by non-crypto catalysts than by internal systemic failures within the crypto space, a distinction that could support a faster reacceleration should risk appetite improve and liquidity return.
Market context
Against the backdrop of a 44% drawdown in crypto market cap from the October peak and substantial outflows, the story of RWAs on-chain remains a central pillar of longer-term value propositions in crypto. The dynamic underscores a broader trend toward tokenization and on-chain finance as mainstream infrastructure projects mature. If on-chain RWAs continue to gain traction, the sector could reorient investor attention toward scalable, real-world use cases, rather than relying solely on volatility-driven appetite for purely digital assets.
Why it matters
For builders, the message is clear: investing in robust on-chain infrastructure for RWAs—oracle reliability, settlement speed, and secure collateral mechanisms—could yield enduring demand. For investors, RWAs offer a potential hedge against crypto-price cycles by anchoring value in tangible, off-chain assets. For the market, the continued growth of RWAs may redefine what constitutes “crypto value,” expanding the spectrum of investable instruments and potentially attracting traditional finance players to participate in a more regulated, verifiable on-chain ecosystem.
What to watch next
- Updates from RWA.xyz on on-chain RWAs growth metrics and new asset classes tokenized on-chain.
- Institutional pilots adopting on-chain perpetuals and RWA-backed collateral frameworks.
- Regulatory developments affecting tokenized real-world assets and oracle data provisioning.
- Cross-chain integrations that improve liquidity, settling quickly, and governance for RWAs.
Sources & verification
- Sergey Nazarov’s X post discussing bear-market dynamics and RWAs growth.
- RWA.xyz data showing on-chain RWA value growth (about 300% YoY).
- LINK price/index coverage referenced in market commentary.
- Bernstein note on Bitcoin bear-case context.
- Wemade KRW stablecoin alliance with Chainlink coverage.
RWA momentum and a reshaping crypto market
Chainlink’s foundational role in powering on-chain RWAs remains a consistent thread as the sector charts its next phase. The on-chain RWA narrative is supported by observable growth metrics and a steady flow of products that enable real-world assets to exist, trade, and collateralize on-chain. While price action can swing with global liquidity and risk sentiment, the underlying technology stack—secure oracles, robust data feeds, and programmable contracts—continues to attract the interest of developers, institutions, and asset issuers alike. The broader question is whether on-chain RWAs will eventually carry a larger share of industry value than speculative crypto assets, a shift Nazarov has been vocal about predicting for years.
Ethereum (CRYPTO: ETH) has slipped into a zone that market watchers associate with capitulation, as on-chain signals flash bearish, yet opt for caution on whether a definitive bottom is in place. The focal point is the MVRV Z-Score, a gauge that compares current market value to the realized value, effectively measuring how much investors are paying relative to the price at which Ether last moved. A reading around -0.42 indicates Ether is trading below its realized value, a sign historically linked to stress but not a sole predictor of a lasting bottom. While some analysts argue this signals a clear capitulation phase, others warn that the current slide may not reach the extremes observed in past bear markets.
The MVRV Z-Score was designed to flag phases of euphoria or capitulation by showing when market value diverges markedly from realized value. In practice, a notably negative score has preceded bottoming behavior in prior cycles, albeit without a guaranteed timetable. Joao Wedson, a crypto Quant analyst and founder of Alphractal, described the current reading as “showing that Ethereum is indeed going through a clear capitulation process.” Yet, he cautioned that today’s data do not match the intensity of the 2018 and 2022 bear-market lows. The record low for the metric sits at -0.76, observed in December 2018, underscoring the scale of the slide that would be needed for a historical parallel.
The near-term horizon, however, remains contested. Wedson noted that further downside is possible before any sustained recovery takes hold, citing continued market stress and the possibility of liquidity constraints during tax season. “The market is already under stress, but historically, there is still room for further downside before a definitive structural bottom is formed,” he said. Ether’s price action has been volatile, with a sharp decline followed by a tentative rebound, complicating the call on whether the capitulation phase is nearing its end.
The recent price action has been punishing: Ether has fallen about 30% over the past two weeks, sinking to a bear-market low near $1,825 on a Friday before a modest rebound to roughly $2,100 on the following Monday. The moves come amid broader macro fragility and shifting risk sentiment within crypto markets, prompting both caution and opportunism among analysts. Some traders and researchers see this as a rare “buy fear” window, while others warn that risk remains elevated until on-chain dynamics confirm a bottom.
HashKey Group senior researcher Tim Sun told Cointelegraph that historical performance has reinforced the view that Ethereum’s MVRV Z-Score can be a reliable indicator for identifying bottoming zones, particularly when combined with evolving on-chain activity and long-term ecosystem development. “Judging by on-chain activity, protocol evolution, and long-term ecosystem structure, Ethereum’s fundamentals have not seen any substantive deterioration. On the contrary, they continue to improve across several key dimensions,” he said. Still, Sun stressed that current trajectories could change if the primary drivers of decline persist, suggesting that a definitive bottom remains contingent on future liquidity and demand signals.
Meanwhile, other observers offered a more optimistic read. Michaël van de Poppe, founder of MN Fund, argued that the drawdown presents a rare opportunity to consider ETH as an investable bet, noting a substantial gap between the current price and the “fair price” implied by the MVRV ratio. “I think that this is a tremendous opportunity to be looking at ETH,” he tweeted, positing that negative deviations historically precede substantial recoveries when macro and on-chain conditions align. The narrative held that Ether’s network metrics and the broader ecosystem strength underpin a case for accumulation once the weak hands have been flushed out.
Other voices joined the chorus of potential catalysts for a rebound. Andri Fauzan Adziima, Bitrue’s research lead, suggested that persistent negative MVRV zones have historically preceded strong recoveries in subsequent cycles. He contended that ETH’s network fundamentals remained robust and that a long-term accumulation stance could emerge once price risk subsides. “Brutal capitulation now, but historically one of the best ‘buy fear’ windows for ETH,” Adziima said, underscoring the tension between near-term price action and longer-term structural factors.
Market participants acknowledged that the current pullback may be overshadowed by longer-term catalysts such as network upgrades and continued ecosystem maturation, even as price action remains sensitive to near-term liquidity and macro dynamics. The narrative that “buying fear” can yield outsized returns if followed by demand recovery continues to gain traction among several traders, though it remains balanced by caution regarding April liquidity and potential tax-related squeezes.
One of the best “buy fear” windows for Ether
Despite the caution, several observers argued that the current environment could present one of the more compelling entry points for ETH in recent memory. Van de Poppe’s commentary echoed a view shared by others that a sharp deviation below fair value can precede a robust rebound when demand returns and on-chain indicators resume strengthening. The notion is that ETH’s price could be primed for a longer-term recovery even if the immediate path remains choppy.
As the debate continues, sentiment remains nuanced. Some participants emphasize that negative MVRV conditions have historically aligned with durable recoveries once the weak hands capitulate, while others warn that liquidity constraints around the April tax season could delay any sustained recovery. The balance between on-chain fundamentals and macro stressors will likely shape Ether’s trajectory over the coming weeks and into the next quarter.
For investors watching the tape, the key takeaway is that volatility may persist even as underlying fundamentals show resilience. The combination of a negative MVRV reading and persistent price pressure suggests that any bottoming process will require a convergence of favorable liquidity and sustained demand, rather than a simple technical bounce.
Why it matters
The ongoing discussion around Ether’s valuation and bottoming prospects matters for multiple stakeholders. For traders, MVRV-based indicators provide a framework to interpret on-chain signals amid price volatility, while investors may view the current setup as an opportunity to accumulate at a discount relative to realized value. For developers and ecosystem participants, the narrative about Ethereum’s fundamentals—network activity, upgrade timelines, and long-term growth—matters for capital allocation, governance engagement, and potential product developments that could draw renewed user interest.
From a market-wide perspective, Ethereum’s fate remains a bellwether for risk appetite in crypto markets. A clear bottom in ETH could bolster sentiment across altcoins and contribute to a broader risk-on environment, while a protracted drawdown could reinforce caution and delay recovery for other assets. In either case, the episode underscores the importance of on-chain metrics as a corroborating lens for price action, beyond headlines and short-term moves.
What to watch next
- Monitor liquidity conditions around the April tax season for potential downside or relief catalysts.
- Track on-chain indicators related to MVRV Z-Score and general network activity to assess whether a structural bottom forms.
- Watch for sustained price stabilization above recent lows and any acceleration in demand signals that could precede a rebound.
- Observe broader macro factors and crypto market flows that could influence risk sentiment and capital allocation.
Sources & verification
- On-chain MVRV Z-Score interpretation and commentary by Joao Wedson of Alphractal (tweet/status referenced in the article).
- Cointelegraph reports on Ether’s 30% decline over a two-week period and the subsequent move to around $2,100.
- HashKey Group insights from Tim Sun regarding MVRV Z-Score reliability and Ethereum fundamentals.
- Industry commentary from Michaël van de Poppe and Bitrue’s Andri Fauzan Adziima on negative MVRV zones and potential buy opportunities.
For the first time in nearly a month, U.S. bitcoin exchange-traded funds (ETFs) have recorded back-to-back net inflows, snapping a redemption streak that stretched back to mid-January.
According to SoSo value data, the consecutive inflows shift began on Friday with $471.1 million in fresh capital, followed by a $144.9 million on Monday. This comes as bitcoin bounced back from Thursday’s $60,000 low to around $70,000.
In mid-January, bitcoin peaked near $98,000 after a two week rally that started at $87,000. The subsequent sell-off to $60,000 saw investors yank millions of these spot ETFs.
Broadly speaking, investors still appear confidence about the cryptocurrency’s long-term prospects, as evident from the spot ETFs’ resilient asset under management (AUM).
According to Checkonchain, the cumulative AUM of the 11 funds has only decreased by about 7% since early October, sliding from 1.37 million BTC to 1.29 million BTC. Bitcoin, meanwhile, is down over 40% since hitting record highs above 126,000 in October.
Ethereum has hit a zone typically associated with mass selling, with an MVRV Z-Score returning a score of -0.42 — though analysts are split on whether the price of Ether is close to bottoming out.
The MVRV Z-Score is a metric used to assess whether a crypto asset is overvalued or undervalued by comparing its market value to its realized value, which reflects the total value of Ether based on the price at which it was last transacted.
The metric was created to identify periods of market euphoria or capitulation when market value was considerably higher or lower than realized value.
CryptoQuant analyst and Alphractal founder and CEO, Joao Wedson, said the score “shows that Ethereum is indeed going through a clear capitulation process.”
However, the analyst said the data “does not compare to the intensity” seen at the major bottoms of the 2018 and 2022 bear markets.
The lowest value in history was -0.76, recorded in December 2018, said Wedson.
Further downsides for ETH prices possible
The analyst cautioned that further downsides could be possible before any meaningful recovery.
“The market is already under stress, but historically, there is still room for further downside before a definitive structural bottom is formed,” he said.
The price of Ether has fallen 30% over the past fortnight, reaching a bear market low of $1,825 on Friday before a minor recovery to $2,100 on Monday.
Related: Tom Lee tips lack of leverage and gold ‘vortex’ for Ether’s 21% slump
HashKey Group senior researcher Tim Sun told Cointelegraph that historically, Ethereum’s MVRV Z-Score “has proven to be a highly reliable indicator for tracking subsequent market shifts, particularly in identifying bottoming zones across multiple cycles.”
“Judging by on-chain activity, protocol evolution, and long-term ecosystem structure, Ethereum’s fundamentals have not seen any substantive deterioration. On the contrary, they continue to improve across several key dimensions,” he said.
However, it is premature to conclude that Ether has finished its bottoming process as long as the primary drivers of the current decline persist, he added.
“Given the potential liquidity constraints associated with the upcoming April tax season, the probability of further price downside remains a significant factor.”
One of the best “buy fear” windows for Ether
Other market commentators, such as MN Fund founder Michaël van de Poppe, were a little more optimistic, stating, “I think that this is a tremendous opportunity to be looking at ETH.”
“The core reason for this is that there’s a massive gap to the ‘fair price,’” he said, referring to the MVRV ratio.
Ether is currently as undervalued as it was during the April 2025 crash, the June 2022 bottom after the Terra/Luna collapse, the March 2020 Covid crash, and the December 2018 bear market bottom.
“In all of those cases, this provided a tremendous buying opportunity for this particular asset.”
Andri Fauzan Adziima, research lead at crypto trading platform Bitrue, told Cointelegraph that negative MVRV zones “have repeatedly preceded explosive recoveries in past cycles.”
“With ETH’s network metrics holding strong, it feels like a prime long-term accumulation setup once the weak hands are fully flushed,” he said.
“Brutal capitulation now, but historically one of the best ‘buy fear’ windows for ETH.”
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Bitcoin price slipped again on Feb. 10 after failing to stay above the $70,000 level, an area that had supported the market through much of the recent consolidation.
Summary
- Bitcoin is under pressure as capital inflows fail to translate into price expansion.
- On-chain data shows rising whale exchange deposits and steady ETF outflows.
- Technical structure continues to favor distribution over accumulation.
At press time, BTC was trading around $68,979, down 2% over the past 24 hours. The weakness extends across all major timeframes, with losses of 12% over the past week, 23% over the last month, and roughly 30% year-over-year.
The pullback has been sharp and persistent. Since reaching an all-time high of $126,080 in October 2025, Bitcoin (BTC) has fallen by nearly 45%. Rather than a single washout event, the decline has unfolded through steady selling.
At the same time, market activity has increased. Spot trading volume jumped 15.2% in the last 24 hours to $52 billion, pointing to active repositioning as traders reduce exposure or rotate capital.
Derivatives markets reflect a similar tone. CoinGlass data shows Bitcoin futures volume rising 4.97% to $70 billion, while open interest slipped 1.98% to $45 billion.
The combination suggests traders are closing positions faster than new leverage is being added, a pattern often seen during periods of distribution.
Selling pressure overwhelms inflows
Concerns around Bitcoin’s ability to stage a recovery were shared by CryptoQuant CEO Ki Young Ju. In a Feb. 9 post on X, Ju said Bitcoin is currently “not pumpable,” arguing that selling pressure is absorbing capital faster than it can translate into price gains.
Ju pointed to a sharp contrast between recent market cycles. In 2024, a $10 billion capital inflow expanded Bitcoin’s book value by $26 billion. In 2025, however, roughly $308 billion flowed into the market while total market capitalization fell by $98 billion. According to Ju, the usual multiplier effect has broken down under the weight of sustained selling.
On-chain data adds weight to that view. CryptoQuant contributor Amr Taha flagged two whale transfers of more than 5,000 BTC into Binance on Feb. 2 and Feb. 9, an uncommon event within a single week.
The first transfer aligned with Bitcoin’s slide from $77,000 to below $70,000 by Feb. 6, raising concerns that large holders may be using rallies to distribute into liquidity.
Institutional demand has also cooled. U.S. spot Bitcoin exchange-traded fund holdings peaked near 1.36 million BTC in mid-October 2025, alongside the market high. By Feb. 9, total holdings had fallen to roughly 1.27 million BTC, implying net outflows of around 90,000 BTC, or 6.6% of ETF reserves.
Bitcoin price technical analysis
From a technical perspective, losing $70,000 has altered the market structure. After several unsuccessful attempts to regain the $71,000–$73,000 range, the level now serves as resistance.
The price is still below the 50-day and 20-day moving averages, which are both limiting attempts at an upward trend. Momentum is still lacking. The relative strength index is in the 32–34 range, indicating an oversold situation without a definite bullish divergence.
After a period of compression, the price is clinging to the lower Bollinger Band as the bands begin to widen. In similar situations, failing to reclaim the mid-band often leads to further downside. Volume patterns reinforce this outlook, showing steady liquidation rather than panic selling, since sell-side spikes are not met with strong rebound activity.
A brief push toward $73,000–75,000 is feasible if Bitcoin can maintain above $68,000–69,000 and recover $71,000. A sustained close above the 50-day average near $79,000 would be needed to shift the trend.
On the downside, failure to defend $68,000 keeps pressure intact. A break below $62,800 opens the door to $60,000, with deeper liquidity waiting near $58,000.
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