Crypto World
Stablecoins as Shadow Banking – Smart Liquidity Research
Stablecoins were supposed to be the “boring” part of crypto. No volatility. No drama. Just digital dollars moving at internet speed.
Instead, they’ve quietly become one of the most important—and controversial—financial experiments of the decade.
Behind the scenes, stablecoins are starting to look a lot like shadow banks.
What Is Shadow Banking?
“Shadow banking” isn’t illegal banking. It refers to financial intermediaries that perform bank-like activities—without being regulated like traditional banks.
Think:
These institutions:
No deposit insurance.
No direct central bank backstop.
Plenty of systemic risk if something breaks.
Sound familiar?
How Stablecoins Mimic Banks
Take giants like:
Here’s what they do:
-
Accept dollars from users
-
Issue digital tokens pegged 1:1
-
Invest reserves into yield-bearing assets
(Treasuries, repo agreements, cash equivalents)
That’s deposit-taking and asset management—core banking functions.
The difference?
They aren’t chartered banks.
The Maturity Mismatch Problem
Traditional banks borrow short (deposits) and lend long (loans).
This creates liquidity risk.
Stablecoins claim to hold high-quality liquid assets—primarily short-term U.S. Treasuries. But if redemptions spike during panic, they face the same stress dynamic:
We saw shades of this during the 2022 depegging episodes—notably with algorithmic designs like TerraUSD, which collapsed spectacularly (though it lacked traditional backing).
Even asset-backed models face redemption pressure risk.
The Treasury Market Connection
Here’s where it gets interesting.
Stablecoin issuers are now among the largest buyers of short-term U.S. Treasuries. Some reports have placed Tether among the top global holders.
That means:
Crypto liquidity
→ flows into Treasuries
→ supports U.S. government financing
Stablecoins aren’t just crypto plumbing anymore.
They’re plugged into global macro finance.
If large-scale redemptions occur, forced Treasury sales could ripple into traditional markets.
That’s textbook shadow banking spillover risk.
Regulatory Gray Zone
Banks must:
Stablecoin issuers?
Regulation varies by jurisdiction. Oversight is patchwork. Some operate through money transmitter licenses rather than full banking charters.
Governments are now racing to respond. The U.S., EU, and Asia are all drafting or implementing frameworks to bring stablecoins closer to traditional prudential standards.
The debate is simple:
Are stablecoins payment tools?
Money market funds?
Narrow banks?
Or systemic shadow banks?
Why This Matters
Stablecoins power:
They solve real problems:
-
Faster settlement
-
Lower fees
-
Global accessibility
But scale changes everything.
When billions turn into hundreds of billions, stability becomes a public concern.
Shadow banking historically grows during financial innovation cycles—until a crisis exposes structural weaknesses.
Stablecoins may be early in that arc.
The Bull Case
Some argue stablecoins are safer than banks because:
-
Reserves are primarily short-term Treasuries
-
No risky lending books
-
Transparency reports are increasing
-
On-chain flows are auditable
In this view, stablecoins represent a leaner, programmable form of narrow banking.
The Bear Case
Critics warn:
If confidence breaks, digital bank runs happen faster than physical ones.
Panic spreads at blockchain speed.
The Future: Bank, Fund, or Something New?
Three possible paths:
-
Full Bank Model
Stablecoin issuers obtain banking licenses. -
Money Market Regulation Model
Treated like cash-equivalent funds. -
Hybrid Regulated Digital Cash Model
Custom framework recognizing blockchain-native design.
The decision will shape the next decade of digital finance.
Final Take
Stablecoins aren’t just a crypto convenience anymore.
They:
-
Warehouse billions in Treasuries
-
Provide dollar access globally
-
Operate outside traditional banking charters
-
Influence liquidity across markets
That’s not a niche experiment.
That’s shadow banking in digital form.
And history shows shadow banking only stays in the shadows—until it doesn’t.
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Ethereum’s correction appears to be accelerating, with price sliding toward the critical $1,900 support level and futures sentiment hitting its most bearish reading in three months.
Summary
- Ethereum price is under pressure across all major timeframes, with structure still tilted to the downside.
- Futures traders are increasingly defensive, as aggressive selling begins to dominate derivatives flows.
- The $1,900 level now stands as a pivotal support; holding it could stabilize price, while a break may accelerate losses.
At press time, Ethereum was changing hands at $1,958, marking a 6.4% drop in the last 24 hours as continued selling dragged prices lower. Over the past week, the coin has fluctuated between $1,907 and $2,129, but it has stayed under pressure across every major timeframe.
In the last seven days, Ethereum (ETH) has slipped 6.3%. The losses deepen when you zoom out. It is down 40% over the past month and 27% compared with a year ago, showing how strong and persistent this correction has been.
Trading activity in the spot market picked up as prices fell. During the sell-off, 24-hour volume jumped 34% to reach $31 billion, suggesting that more traders stepped in while the price tested important support levels.
Derivatives, on the other hand, tells a more cautious story, pointing to a market that remains on edge. As per CoinGlass data, derivatives volume rose 18% to $40 billion while open interest dropped 7% to $23 billion. This combination suggests that traders are closing positions into volatility rather than adding fresh leverage.
Futures sentiment flips extremely bearish
Additional pressure is coming from longer-term derivatives sentiment. A Feb. 15 analysis by CryptoQuant contributor CryptoOnchain revealed a notable shift in futures behavior on Binance. The Ethereum Taker Buy/Sell Ratio (30-day moving average) has dropped to 0.97, its lowest reading since November 2025.
When this ratio drops below 1.00, it shows that aggressive sell orders are outpacing aggressive buys. Using a 30-day average helps filter out daily fluctuations, turning this into a structural signal rather than a short-term reaction.
At the current levels, the data indicate that futures traders have been leaning on the sell side for several weeks, either hedging their exposure or taking a defensive stance as prices weaken.
If spot market demand is unable to absorb the supply close to support, this ongoing imbalance raises the possibility of prolonged consolidation or additional losses, but it does not guarantee that prices will continue to decline right away.
Ethereum price technical analysis
Ethereum is still clearly in a downward trend. Since late December, there have been consistently lower highs and lower lows, suggesting that the correction is still ongoing. Sellers continue to dominate the market, as shown by the price remaining below the 20-day moving average.
Volatility has spiked sharply. The recent downturn pushed ETH close to the lower Bollinger Band around $1,600, with the bands widening, a classic sign of a strong directional move. Despite a minor recovery from that extreme, the price is still trading close to the lower half of the range, suggesting that selling pressure has lessened but not reversed.
A crucial psychological and technical level is now the $1,900 mark. It lines up with a previous consolidation zone where buyers once tried to stabilize prices. If Ethereum breaks below this level decisively, it could drop toward $1,600–$1,650, near the lower edge of the recent volatility range.
Momentum readings remain weak. The relative strength index sits around 32–33, recently brushing near oversold territory. Such levels sometimes trigger short-term rallies, but no bullish divergence has appeared. Throughout the correction, RSI has failed to climb back above 50, keeping overall momentum firmly in the bearish camp.
For bulls to regain control, a daily close holding above $1,900 and RSI pushing back into the 40–45 range would be necessary. If $1,900 fails, downside risk remains elevated.
A move toward $1,600, and potentially lower, would be consistent with both the current technical structure and further bearish tilt in futures sentiment.
A short but busy week lies ahead on the United States economic calendar as spot crypto markets lose recent gains again.
All eyes will be on the PCE inflation report this week, following last week’s CPI, and the Federal Reserve minutes on Wednesday.
January’s CPI came in slightly below expectations, with headline inflation at 2.38% year-on-year and core CPI at 2.5%, the lowest since early 2021. This boosted the stock and crypto markets on Friday, but gains in the latter were soon eroded over the weekend.
“Meanwhile, geopolitical tensions remain, and macroeconomic uncertainty is elevated,” said the Kobeissi Letter, cautioning of “more volatility this week.”
Economic Events Feb. 16 to 20
Traditional markets are closed in the US on Monday for the President’s Day holiday.
There is an ADP employment update on Tuesday, followed by the January Retail Sales report. Wednesday sees more consumer spending data with the delayed December Durable Goods Orders numbers.
The Fed meeting minutes are also released on Wednesday, and there will be 10 central bank speaker events, which could shed light on future monetary policy decisions.
Investors will also get an early look at economic growth for the fourth quarter with the Thursday release of the GDP report.
However, the big data of the week is the December Personal Consumption Expenditures (PCE) inflation report.
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Based on the January CPI data, Goldman Sachs raised its PCE outlook, according to reports.
“We estimate that the core PCE price index rose 0.40% in January,” said economists.
The growth projections were due to rising consumer electronics and IT prices, which are more heavily weighted in PCE than CPI. A global RAM and storage shortage due to AI data center demand has caused computer and component prices to surge.
“So far, data doesn’t offer much reason for the Fed to cut rates at its next meeting in March,” wrote The Street.
The CME Fed Watch Tool has a 90% probability that rates will remain unchanged.
Crypto Market Outlook
Crypto markets have lost last week’s late gains, with total capitalization dropping 2.5% over the past 24 hours in a fall back to $2.41 trillion.
Bitcoin failed to hold above $70,000 for long and retreated to $68,300 in early Asian trading on Monday. The asset has remained rangebound for the past ten days.
Ether prices have tanked hard, shedding 5% from almost $2,100 back to $1,950 at the time of writing, while the altcoins continue to bleed out.
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Animoca Brands has secured a Virtual Asset Service Provider (VASP) license from Dubai’s Virtual Assets Regulatory Authority (VARA), clearing the way for the company to broaden its crypto operations across the Middle East.
The license allows the Hong Kong-founded Web3 investor and platform developer to offer broker-dealer services and investment management related to virtual assets in and from Dubai, excluding the Dubai International Financial Centre, according to a Monday announcement. The services are aimed primarily at institutional and qualified investors worldwide.
“This licence enhances our ability to engage with Web3 foundations as well as global institutional and qualified investors within a well-regulated framework,” Omar Elassar, managing director for the Middle East and head of global strategic partnerships at Animoca Brands, said.
VARA, established in March 2022, is responsible for regulating and overseeing the provision, use, and exchange of digital assets across Dubai’s mainland and free zones.
Related: Dubai and UAE move to align crypto frameworks under new partnership
Animoca to serve institutional investors in Dubai
VARA’s public register shows that the license was issued on Feb. 5. It permits the firm to serve institutional and qualified investors under the oversight of Dubai’s VARA.
Animoca Brands develops blockchain platforms and supports Web3 ecosystems, including The Sandbox, Open Campus and Moca Network, while also backing early-stage projects. The company says its investment portfolio spans more than 600 companies and digital-asset initiatives.
In January, Animoca Brands acquired gaming and digital collectibles company Somo, adding Somo’s playable and tradable collectibles to its broader portfolio of blockchain-based projects.
Related: What Dubai’s ban on Monero and Zcash signals for regulated crypto
Crypto firms expand crypto operations in Dubai
The move adds to a growing list of crypto firms establishing regulated operations in Dubai. In October 2025, digital asset infrastructure firm BitGo also obtained a broker-dealer license from Dubai’s VARA, allowing its Middle East and North Africa unit to provide regulated digital-asset trading and intermediation services to institutional clients in the emirate.
The approval came after VARA said it had issued financial penalties against 19 companies for “unlicensed” Virtual Asset activities and “breaches of VARA’s Marketing Regulations.”
Magazine: Bitget’s Gracy Chen is looking for ‘entrepreneurs, not wantrepreneurs’
Businessman and TV personality Kevin O’Leary has won a multi-million-dollar defamation lawsuit against crypto influencer Ben Armstrong, also known as “Bitboy.”
Miami federal judge Beth Bloom on Friday ordered Armstrong to pay almost $2.83 million in damages to O’Leary over a series of social media posts accusing the Shark Tank star of being a murderer.
O’Leary and his wife, Linda, were in a boating accident in 2019 that resulted in two deaths when their boat struck another. Armstrong accused O’Leary of murder in multiple X posts in March 2025, claiming that he paid millions to cover up the incident.
In her order, Judge Bloom said that O’Leary wasn’t operating the boat at the time and was never charged. While Linda O’Leary was charged with careless operation of a vehicle, she was exonerated after a 13-day trial that found the other boat was operating without its lights on.
Armstrong posted O’Leary’s phone number in X outburst
Judge Bloom said Armstrong had “escalated his harassment campaign” by sharing O’Leary’s private phone number and “urging his followers to ‘call a real life murderer,’” which saw him suspended from X for 12 hours.
O’Leary had said his phone was “lighting up” after the post, and the sharing of his number “significantly affected him, both in his professional and personal life,” according to the order.
Judge Bloom made a default judgment in the case after Armstrong failed to respond to the complaint and did not appear in court. The judge ordered Armstrong to pay $750,000 in mental anguish damages, $78,000 in reputational damages, and $2 million in punitive damages.
Related: Uniswap scores early win as US judge dismisses Bancor patent suit
The decision is the latest legal blow to Armstrong, who has been embroiled in public legal controversies over the past few years after being removed from the Bitboy Crypto brand in 2023, once one of the most-watched crypto-related YouTube channels.
He was arrested in March in Florida over emails he had sent to Georgia Superior Court Judge Kimberly Childs while acting as his own attorney. He was also arrested again in July in Georgia on charges of making harassing phone calls.
Armstrong was also arrested years earlier, in 2023, while livestreaming outside a former associate’s house, whom he had alleged was in possession of his Lamborghini.
Magazine: Kevin O’Leary says quantum attacking Bitcoin would be a waste of time
Bitcoin (CRYPTO: BTC) started 2026 with a steep slide and is on track for a challenging first quarter, echoing patterns seen in prior bear markets. The largest cryptocurrency by market cap has fallen about 22% since January, slipping from roughly $87,700 to the mid-$60k range, with recent prints near $68,000. If that pace holds, Q1 could mark the worst start to a year since the 2018 bear market, when BTC tumbled almost 50%, according to data tracked by CoinGlass. Ether (CRYPTO: ETH), the second-largest asset, has also pushed lower in the year’s early weeks, though its losses have been comparatively milder, aligning with a broader risk-off mood across crypto markets.
Key takeaways
- Bitcoin is down roughly 22% year-to-date, trading around $68.6k after opening near $87.7k, signaling entrenched near-term softness.
- The first quarter could become the worst since 2018 for BTC, with 2018 data showing a 49.7% quarterly decline according to CoinGlass.
- Ether has fared similarly in its own context, with about 34.3% losses in the current Q1—the third-worst start among nine observed first quarters historically.
- BTC has posted five straight weeks of losses, including a January drop of around 10.2% and a February trend that remains negative, needing a reversal above $80k to avert further red printing in February.
- Analysts describe the move as a routine correction within a longer-term backdrop of rising institutional interest and halving-cycle dynamics, rather than a structural breakdown.
Tickers mentioned: $BTC, $ETH
Sentiment: Bearish
Price impact: Negative. The price has declined to about $68,670, indicating ongoing downside pressure in the near term.
Market context: The sector remains sensitive to macro headwinds and liquidity conditions, with a focus on how institutional adoption and supply-side cycles could shape a potential rebound later in the year.
Why it matters
From a market structure perspective, the current pullback highlights how crypto assets are trading in a risk-off environment even as macro narratives evolve. Bitcoin’s retreat from the high-70s and into the 60k territory reflects a mix of profit-taking, cautious positioning by retail participants, and a broader test of support levels after a period of elevated volatility. The context matters because BTC’s price level often informs broader risk appetite in the sector, influencing altcoins and the trajectory of liquidity in the ecosystem.
Historically, the first quarter has displayed pronounced volatility for crypto. In 2018, during a brutal bear market, BTC shed almost half of its value within three months, a benchmark often cited by traders and analysts when assessing risk. In 2025 and 2020, Q1 saw notable declines as well, though the magnitude varied. The current quarter’s descent—paired with ETH’s sharp, yet comparatively less severe, slide—appears to align with a broader pattern: macro uncertainties tend to weigh on risk assets early in the year, even as final-year catalysts or structural developments remain in view.
One factor driving the current mood is the perpetual tug-of-war between risk-off sentiment and the long-run thesis for crypto assets. On one hand, institutions have continued to explore exposure and on-chain activity has shown resilience in certain metrics. On the other hand, macro headwinds—rising rates expectations, liquidity considerations, and geopolitical dynamics—can confine upside moves in the near term. In this context, market participants are watching crucial levels to gauge whether the pullback is a temporary correction or the onset of a more protracted downturn.
Within the price action, BTC’s five-week losing streak underscores a persistent near-term weakness. A slide of around 2.3% in the preceding 24 hours, with prices hovering around $68,670 at press time, suggests a market that remains sensitive to any fresh negative catalysts. CoinGecko tracks Bitcoin’s price and confirms the current trading range, reinforcing the view that a meaningful rebound would require catalysts beyond mere technical bounce—potentially including improved macro clarity or a renewed wave of institutional buying interest.
What to watch next
- Price level to watch: Whether BTC can reclaim the $80,000 threshold to halt or reverse the February red trend.
- Near-term performance: The next weekly closes to determine if the five-week streak of losses ends or extends.
- ETH trajectory: Whether Ether’s decline moderates alongside BTC or diverges due to sector-specific catalysts.
- Macro and on-chain signals: Monitoring shifts in liquidity conditions, risk sentiment, and any halving-cycle-related dynamics that could bolster a longer-term recovery.
- Institutional flow indicators: Any uptick in demand from well-funded participants that could support a sustained move higher once macro conditions stabilize.
Sources & verification
- CoinGlass data on Bitcoin’s quarterly performance and historical comparisons to 2018 (bear market) data.
- CoinGecko price data confirming BTC around $68k–$69k and daily movement metrics.
- LVRG Research commentary from Nick Ruck on BTC’s correctional phase and long-term resilience.
- Twitter/X reference to DaanCrypto’s assessment of Q1 volatility and its historical context.
Bitcoin’s Q1 trajectory amid macro headwinds and halving dynamics
Bitcoin (CRYPTO: BTC) is navigating a challenging start to 2026, with a renewed sense of caution across markets. After opening the year near $87,700, the benchmark asset has ceded roughly a quarter of its value, slipping into the mid-60k zone as headlines about liquidity and policy remain in focus. The decline mirrors patterns seen at the outset of prior downturns, where quarterly losses in the double-digit range have not always translated into a permanent downturn but instead have persisted until a new phase of accumulation takes hold. CoinGlass data help frame the severity: the first quarter of 2018, for example, remains the gold standard for a severe quarterly drawdown in the BTC bear era. The current slide has revived debates about whether the market is entering a longer-term correction or simply testing support before a potential resumption of upside.
Ether (CRYPTO: ETH) is not immune to the broader risk-off tone, though its drawdown has followed a somewhat different cadence. The leading altcoin has faced substantial selling pressure in Q1, with losses that stand at roughly 34% so far this quarter. Historically, ETH has shown red in a minority of its first quarters, but the current figure places it among its harsher starts. The divergence between BTC and ETH’s path underscores the nuanced dynamics within the crypto market, where Bitcoin often drives overall market psychology while the altcoin complex trails in response to sector-specific catalysts and cross-asset risk metrics.
Market observers have pointed to a recurring theme: the first quarter has a reputation for volatility in crypto markets, a fact that traders reference when calibrating risk and exposure. Daan Trades Crypto, an analyst cited in recent commentary, notes that quarterly fluctuations tend to be self-contained at the outset of a given year, and that early-year losses do not always predict how the rest of the year will unfold. Such commentary is supported by a broader body of historical data indicating that while Q1 performance can be harsh, it does not invariably preface a structural market decline, particularly when halving cycles and institutional adoption offer longer-term catalysts.
Current price action places BTC at a crossroads. When prices last crossed into the $70k range, buyers often argued for a swift rebound on improved macro sentiment or renewed liquidity. That level has since yielded to selling pressure, and a sustained breach of price levels around $68k–$69k raises the question of whether the market is undergoing a deeper retracement or simply pausing before the next leg up. For traders and investors, the key remains whether macro signals align with on-chain activity and whether the next set of data points—be it inflation prints, rate expectations, or regulatory developments—could tilt the balance in favor of buyers or sellers over the coming weeks.
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As the cryptocurrency market enters a new phase of volatile expansion, one of the leading global digital asset trading platforms Zoomex officially announced the launch of its annual flagship initiative — “February Sprint: Growth Season.”
Featuring a total prize pool of up to $100,000, the campaign is designed not only to empower users to achieve step-by-step asset growth but also to further embody Zoomex’s unwavering commitment to “asset sovereignty” and “rule transparency,” creating a fair, competitive arena where assets move seamlessly, and reward pathways remain clear for traders worldwide.
In today’s trading environment, user expectations surrounding platform integrity and asset liquidity have risen to core strategic priorities. Zoomex’s Brand Director stated: “We believe the foundation of fairness lies in users having absolute sovereignty over their assets and the ability to access them at any time. The market’s trust threshold for trading platforms is at a pivotal turning point.
That is why Zoomex continues to optimize a frictionless asset circulation system, ensuring that every participant’s assets are safeguarded within a highly transparent framework while maintaining maximum liquidity. This is not only a demonstration of technological strength, but also our brand commitment to protecting users’ asset sovereignty.”
To ensure users can execute trades at optimal cost throughout the Rapid Sprint, Zoomex leverages its proprietary Dual Liquidity Pool architecture to deliver a highly liquid, ultra-low slippage trading environment. Compared to a single liquidity source, the dual-pool mechanism significantly enhances order book depth.
Whether users are accelerating toward high-volume trading rewards or hedging risk during extreme market volatility, every order is executed at precise pricing. This transparent pricing and execution model eliminates hidden market costs, ensuring that every reward earned during Growth Season delivers tangible value.
The campaign, running from February 12 to February 28, is designed entirely around the principle of rule transparency, with all participants competing under a unified and fair algorithm:
Equal Starting Line: Exclusive New User Benefit
- New users who register and complete verification will receive a $10 bonus. This initiative encourages participants to experience Zoomex’s efficient asset mobility and impartial matching engine firsthand.
Accelerated Advancement: $1,000 Deposit Growth Reward
- In recognition of capital efficiency, Zoomex offers tiered incentives based on cumulative deposits. From $50 to $1,000 in total deposits, users can unlock rewards of up to $300 in bonus funds and $700 in Position Vouchers. All data is synchronized in real time, ensuring full visibility into each user’s asset growth trajectory.
Professional Recognition: Trading Days Rewards & XAUT Gold Airdrop
- The campaign honors disciplined traders by rewarding cumulative trading days, offering up to $110 in bonus incentives. For advanced participants seeking greater challenges, Zoomex also introduces the XAUT airdrop rewards — backed by physical gold — of up to $300 in XAUT. This structure guides users toward diversified and stable asset allocation within a transparent and fair trading environment.
Zoomex’s February “Rapid Sprint” Growth Season represents a resonance of integrity between the platform and its users. Here, every asset flow is transparent, and every trade execution is fair and reliable. We do not participate in market gamesmanship — we focus solely on safeguarding your asset sovereignty and empowering your journey toward sustainable growth.
Register now and begin your asset growth sprint with Zoomex today.
About ZOOMEX
Founded in 2021, Zoomex is a global cryptocurrency trading platform with over 3 million users across more than 35 countries and regions, offering 700+ trading pairs. Guided by its core values of “Simple × User-Friendly × Fast,” Zoomex is also committed to the principles of fairness, integrity, and transparency, delivering a high-performance, low-barrier, and trustworthy trading experience.
Powered by a high-performance matching engine and transparent asset and order displays, Zoomex ensures consistent trade execution and fully traceable results. This approach reduces information asymmetry and allows users to clearly understand their asset status and every trading outcome. While prioritizing speed and efficiency, the platform continues to optimize product structure and overall user experience with robust risk management in place.
As an official partner of the Haas F1 Team, Zoomex brings the same focus on speed, precision, and reliable rule execution from the racetrack to trading. In addition, Zoomex has established a global exclusive brand ambassador partnership with world-class goalkeeper Emiliano Martínez. His professionalism, discipline, and consistency further reinforce Zoomex’s commitment to fair trading and long-term user trust.
In terms of security and compliance, Zoomex holds regulatory licenses including Canada MSB, U.S. MSB, U.S. NFA, and Australia AUSTRAC, and has successfully passed security audits conducted by blockchain security firm Hacken. Operating within a compliant framework while offering flexible identity verification options and an open trading system, Zoomex is building a trading environment that is simpler, more transparent, more secure, and more accessible for users worldwide.
Bitcoin price is hovering around $68,500 as traders watch for potential volatility around Chinese New Year, a period that has historically coincided with short-term shifts in crypto liquidity.
Summary
- Bitcoin is trading around $68,500 ahead of Chinese New Year, a period that has historically seen mixed crypto performance, with some years showing pre-holiday weakness.
- Coinbase CEO Brian Armstrong said retail users are “buying the dip,” with February BTC and ETH balances equal to or higher than December levels.
- Technically, BTC remains below its 50-day SMA near $83,900, with support at $65,000 and $60,000–$62,000, and resistance around $72,000 and $76,000–$80,000.
Chinese New Year effect — seasonal pressure or coincidence?
Chinese New Year has at times aligned with weakness in Bitcoin (BTC) and broader crypto markets.
The theory is that traders in Asia may reduce exposure ahead of the holiday to free up cash, leading to temporary selling pressure. In some past cycles, BTC saw pullbacks in the days leading into Lunar New Year.
However, the pattern is far from consistent. There have also been years where Bitcoin rallied shortly after the holiday period. Crypto markets today are also more globally distributed than in earlier cycles, reducing the likelihood that one regional holiday alone drives price direction.
Adding another layer, Coinbase CEO Brian Armstrong recently said retail users on the exchange are “buying the dip.”
According to his data, retail BTC and ETH balances in February are equal to or higher than December levels, suggesting long-term holders are accumulating rather than capitulating.
If that trend holds, it could cushion any seasonal selling.
What Bitcoin price analysis shows
On the daily chart, BTC remains below its 50-day simple moving average near $83,900, confirming that the short-term trend is still bearish.
Price has formed a series of lower highs since topping near the mid-$90,000 range in January.
The Relative Strength Index (RSI) sits around 35, recovering from deeply oversold levels near 20 earlier this month. That rebound suggests selling momentum has cooled, but it does not yet confirm a trend reversal.
Immediate support is near $65,000, with stronger support in the $60,000–$62,000 zone, where a sharp capitulation wick formed earlier in February. Resistance stands near $72,000, followed by a heavier supply zone between $76,000 and $80,000.
A break below $65,000 could reopen downside risk toward $60,000. A decisive move above $72,000 would be the first sign that bulls are regaining control, regardless of seasonal narratives.
Crypto markets are deep red on Monday, with industry leader bitcoin sliding lower before a packed week of economic data.
At press time, bitcoin traded near $68,200, down nearly 3% over 24 hours, with XRP , ether , registering much bigger losses. Losses hit 85 of the top 100 tokens by market cap, with privacy coins like monero and zcash down 10% and 8%, respectively.
Smart contract tokens bled too, with the CoinDesk Smart Contract Platform Select Capped Index down nearly 6%, pushing its year-to-date drop to 28%.
The market weakness looks particularly disappointing against the backdrop of the weak U.S. consumer price index data released last week that kept hopes of Fed rate cuts alive.
The CPI growth slowed to 2.4% year-on-year in January from 2.7% in December, the official data showed, reinforcing expectations for at least two 25 basis point rate cuts by the Fed this year. This resulted in the 10-year U.S. Treasury yield falling to 4.05%, the lowest since early December. Bitcoin rallied, rising from nearly $66,800 on friday to over $70,000 over the weekend, but failed to establish a foothold there.
Vikram Subburaj, CEO of the India-based regulated Giottus exchange, said selective demand is the reason why rallies struggle to hold.
“Risk appetite stayed selective and macro cross-currents kept traders defensive. In derivatives, the market continues to behave as if it is ‘de-leveraging first, asking questions later.’ Rallies have struggled to hold and dips are being bought only selectively near obvious levels,” he said in an email to CoinDesk.
Macro heavy weak
A packed week of macro data lies ahead, with traders eyeing the minutes of the January Fed meeting and the release of the Fed’s preferred inflation gauge, the core personal consumption expenditures price index (PCE), for fresh positioning signals.
“PCE inflation, the Fed’s preferred measure, will be closely monitored for confirmation that price pressures are moderating, particularly after CPI showed only gradual disinflation and inflation remains above the 2% target,” Dessislava Laneva, Nexo dispatch analyst, said in an email.
“Markets will assess both the monthly momentum and year-on-year trend for implications for the policy path.” Laneva added.
In traditional markets, Mark Nash of Jupiter Asset Management, a high-profile yen bear has flipped bullish, forecasting 8–9% yen appreciation, particularly against the Swiss franc.
The yen and bitcoin have hit a record positive correlation in recent months, which makes any yen strength a key catalyst for bitcoin bulls.
Bitcoin may be headed for its worst first quarter in eight years, with data showing Bitcoin is already down 22.3% since the start of the year.
The asset began the year trading around $87,700 and has declined by around $20,000 to current lows of around $68,000, putting it on track for its worst first quarter since the 2018 bear market — which fell almost 50%, according to CoinGlass.
Bitcoin (BTC) has declined in seven of the past thirteen Q1s, with the most recent being 2025 when it lost 11.8%, 2020 when it shed 10.8%, and the largest ever, 2018, when it dumped 49.7% in just three months.
“The first quarter of the year is known for its volatile nature,” observed analyst Daan Trades Crypto on Sunday.
“So it’s safe to say, whatever happens in Q1 does not generally translate over further down the line, according to the historical price action,” he added.
First-ever red Jan and Feb?
BTC has only ever seen two consecutive first quarters of losses in the bear market years of 2018 and 2022.
Comparatively, Ether (ETH) has only seen red in three of the past nine first quarters, with the current period shaping up to be its third-worst historically, with 34.3% losses so far.
Related: Bitcoin loses $2.3B in biggest crash since 2021 as capitulation intensifies: Analyst
Meanwhile, Bitcoin is also on track to see its first-ever consecutive January and February in the red. The asset lost 10.2% in January and is down 13.4% so far this month. It needs to reclaim $80,000 to prevent a red February.
Bitcoin is in a correctional phase
Nick Ruck, the director of LVRG Research, told Cointelegraph that the ongoing decline in BTC price amid persistent global economic uncertainty “reflects a regular correctional phase rather than a structural breakdown in the asset’s long-term trajectory.”
“While short-term pressures could intensify if macroeconomic headwinds persist, historical patterns show Bitcoin’s resilience often leads to strong recoveries in later months, particularly as institutional adoption and halving cycle dynamics continue to strengthen its potential,” he added.
Meanwhile, BTC has entered its fifth consecutive week of losses, falling 2.3% over the past 24 hours to $68,670 at the time of writing, according to CoinGecko.
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BTC’s recent recovery may be hiding a dangerous signal. The Bitcoin price bounced nearly 9% between February 12 and February 15, giving the impression that the worst of the correction was over.
But the rebound is already weakening. Now, leverage data, momentum signals, and on-chain profit trends suggest the bounce may have increased crash risk instead of ending it.
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Bitcoin’s 9% Bounce Drew Nearly $2 Billion in Long Bets
Between February 12 and February 15, Bitcoin climbed roughly 9%. At the same time, futures traders aggressively positioned for further upside. Total open interest, which tracks the total value of active futures contracts, rose from $19.59 billion to $21.47 billion. This was an increase of about $1.88 billion, or roughly 9.6%, between February 13 and February 15.
This increase did not happen in isolation. Funding rates also turned strongly positive, rising toward +0.34%. The funding rate is the fee paid between long and short traders. When it is positive, long traders pay short traders. This shows that most BTC traders were betting on prices rising.
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Together, rising open interest and positive funding rates confirmed that the market was positioning for a larger recovery. But the larger chart structure reveals a critical problem.
This entire rebound happened inside a bear flag pattern. A bear flag forms when the price rises slowly after a sharp drop but remains inside a downward continuation structure. It often acts as a pause before another decline.
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The recent rejection near the local peak and the ongoing pullback now show that Bitcoin is still trading inside this bearish pattern. Price is already drifting toward the lower boundary of the flag. If this lower support breaks, the next leg of the weakening Bitcoin price prediction could begin.
Hidden Bearish Divergence and 90% Profit Surge Show Sellers Are Returning
Momentum indicators are now starting to confirm this growing weakness. On the 12-hour chart, Bitcoin formed a hidden bearish divergence between February 6 and February 15.
During this period, the price formed a lower high, meaning the recovery was weaker than the previous peak. But the Relative Strength Index, or RSI, formed a higher high. RSI measures the strength of buying and selling momentum.
This combination is called hidden bearish divergence. It usually appears when buying momentum rises temporarily, but the overall trend remains weak. It signals that sellers are quietly regaining control. Shortly after this signal appeared, Bitcoin’s pullback began.
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At the same time, on-chain profit data surged sharply, creating another warning sign. Bitcoin’s Net Unrealized Profit/Loss, or NUPL, rose from 0.11 on February 5 to 0.21 on February 14. This was an increase of about 90%. It is currently moving near the same zone, at press time.
NUPL measures the average unrealized profit across all Bitcoin holders. It shows how much profit investors are holding on paper. When NUPL rises sharply, it means many investors are suddenly back in profit, even if it is a small amount. This increases the risk of profit-taking.
The last time NUPL reached similar levels was on February 4. At that time, Bitcoin was trading near $73,000. Within one day, the price collapsed to around $62,800. That was a drop of nearly 14%. Now, the same profit structure has appeared again.
This creates a scary situation. Investors holding fresh profits may sell quickly if prices start falling. That selling can accelerate the correction. This aligns with the hidden bearish divergence already visible on the chart.
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Together, these signals show that the recent bounce may have strengthened sellers instead of removing them.
Key Bitcoin Price Levels Show Breakdown Risk Toward $58,800
Bitcoin is now approaching the most important support zone in its current structure. The first critical level is $66,270. This level forms near the lower boundary of the bear flag pattern breaks.
If Bitcoin breaks below this Fib level, the bearish continuation pattern would activate. The next major downside target sits at $58,880 (the $58,000 zone). This level aligns with the 0.618 Fibonacci retracement level ( a structurally strong zone) and represents roughly a 14% decline from current prices.
If selling pressure accelerates further, Bitcoin could fall toward the $55,620 zone, which aligns with the deeper projection of the bear flag structure. On the upside, Bitcoin must reclaim $70,840 to stabilize in the short term.
A stronger breakout above $79,290 would fully invalidate the bearish structure. That would signal that buyers have regained control. Until then, the risk remains tilted to the downside. The recent bounce improved sentiment briefly. But rising leverage, hidden bearish divergence, and a 90% surge in unrealized profits now show that the Bitcoin price recovery may have created the conditions for another drop.
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