Crypto World
The Dow Climbs Back Toward 50,000. Nvidia and Caterpillar Are Leading a Furious Rally.
The Dow surged to its highest levels on record on Friday amid a frenzy of dip-buying led by an unlikely duo.
The blue-chip index was up 1,000 points, or 2.1%. The S&P 500 was up 1.6%. The Nasdaq Composite rallied 1.9%.
The Dow set a record intraday high of 49,980.29. Suddenly, Dow 50,000 is back in play.
The crypto industry is likely to see more projects snapped up by larger companies, which may lead to a much less fragmented sector in the months ahead, says Bullish CEO Tom Farley.
“I was in the exchange sector during continual massive consolidation…the same thing is going to happen starting right now in crypto,” Farley said during an interview on CNBC on Friday.
Farley, who served as president of the New York Stock Exchange (NYSE) until 2018, said the recent drop in the crypto market will be a key catalyst, with Bitcoin (BTC) down nearly 45% from its October all-time high of $126,100 and trading at $69,405 at the time of publication, according to CoinMarketCap
Farley says the consolidation should have already happened
However, he said that the industry’s consolidation should have happened earlier, but inflated valuations kept false optimism going. “It should have happened a year or two ago,” he said.
“People were still holding onto this hope that they’d get 2020 valuations, and so we’d have conversations with companies that would say, hey, we have $10 million in revenue, it’s not growing, we want $200 million to buy the company,” he said.
“That dream is going to be over,” Farley said, adding that “people are going to realize they don’t have businesses, they have products, and they need to merge up, and they need to scale, and that is going to happen.”
Consolidation in the crypto industry can cut both ways. Underperforming projects may be absorbed by larger companies, but this process can lead to redundancies, layoffs, and internal disruption in the industry as companies merge or wind down.
Related: Crypto retail investors are trying to ‘meta-analyze’ crypto crash: Santiment
Eva Oberholzer, the chief investment officer at venture capital firm Ajna Capital, told Cointelegraph in September 2025 that VC firms have become much more selective with the crypto projects they invest in, due to market maturation.
“It’s harder because we have reached a different stage in crypto, similar to every cycle we have seen for other technologies in the past,” Oberholzer told Cointelegraph.
Magazine: Bitcoin’s ‘biggest bull catalyst’ would be Saylor’s liquidation: Santiment founder
TLDR:
- The CFTC update formally includes national trust banks as approved issuers of payment stablecoins for derivatives margin use.
- Staff Letter 25-40 still requires full reserve backing and strict redemption rules for qualifying payment stablecoins.
- The guidance aligns federal trust banks with existing state-regulated stablecoin issuers like Circle and Paxos.
- Combined with the GENIUS Act, the rule signals tighter integration of stablecoins into U.S. financial markets.
The U.S. Commodity Futures Trading Commission has expanded its regulatory guidance on payment stablecoins used in derivatives markets. The change allows national trust banks to qualify as approved issuers under an existing no-action framework.
The update removes a key limitation that had excluded federally chartered trust institutions. It signals deeper integration of stablecoins into regulated financial infrastructure.
CFTC Updates Definition of Payment Stablecoins
The CFTC’s Market Participants Division reissued Staff Letter 25-40 with a revised definition of payment stablecoins. The clarification confirms that national trust banks qualify as permitted issuers.
The original letter, released in December 2025, granted no-action relief to futures commission merchants. It allowed them to accept qualifying payment stablecoins as customer margin collateral.
The guidance also permits firms to hold proprietary stablecoins in segregated customer accounts. These holdings count toward regulatory calculations under strict risk controls.
According to a CFTC press release, staff later realized the original wording unintentionally excluded national trust banks. The revision corrects that oversight and aligns them with state-regulated issuers such as Circle and Paxos.
The framework requires stablecoins to maintain full reserve backing and clear redemption rights. It also mandates operational safeguards and compliance with existing risk management standards.
Social commentary from crypto analysts described the update as a major step for stablecoin adoption in regulated derivatives trading. The reaction focused on its impact on market structure rather than token prices.
GENIUS Act and FDIC Framework Shape Stablecoin Policy
The revised CFTC guidance builds on the GENIUS Act signed into law in July 2025. The legislation created the first federal framework for payment stablecoins used in payments and transfers.
The law introduced reserve requirements and defined oversight roles for both bank and nonbank issuers. It also opened formal pathways for national institutions to participate in stablecoin issuance.
In December 2025, the FDIC proposed a separate rule for banks to issue stablecoins through subsidiaries. That proposal requires supervisory approval and safety and soundness reviews.
The FDIC recently extended its public comment period, according to regulatory notices cited in February 2026 updates. The proposal remains under consideration and has not yet taken effect.
Together, the CFTC and FDIC actions point to a coordinated regulatory direction. Stablecoins now sit closer to traditional banking and derivatives infrastructure.
CFTC Chairman Michael Selig noted that national trust banks have played a role in custody and issuance since their creation under earlier OCC charters. The updated letter reflects their continued position in the payment stablecoin ecosystem.
The move narrows regulatory gaps between state and federally chartered issuers. It also reinforces the U.S. strategy to formalize digital asset markets under post-GENIUS Act policy.
Crypto markets endured a brutal week as liquidity worries resurfaced in the wake of a high-profile Federal Reserve nomination. Investors watched US liquidity signals tighten while Bitcoin ETFs experienced notable outflows, contributing to choppy price action across the sector. The period also featured a string of high-profile financing moves and notable risk events that underscored the fragility of liquidity and risk appetite in crypto markets. Bitcoin and other large assets began to show resilience only after a brief slide, with traders assessing how policy shifts could shape funding conditions in the months ahead.
Key takeaways
- Bitcoin ETFs saw three consecutive days of outflows totaling about $431 million, underscoring persistent liquidity concerns even as spot prices fluctuated and regained ground.
- The crypto market’s largest price swing this week came as BTC traded near the $60,000 neighborhood before reclaiming the $64,000 level, highlighting a delicate balance between selling pressure and support at key levels.
- TRM Labs closed a $70 million Series C, valuing the blockchain intelligence firm at $1 billion and signaling continued investor confidence in on-chain analytics as a bulwark against AI-augmented cybercrime.
- Avalanche’s on-chain tokenization activity surged in Q4, with real-world asset tokenization rising to more than $1.3 billion in TVL and daily momentum aided by BlackRock’s BUIDL fund and other institutional partnerships.
- Jupiter secured a $35 million strategic investment from ParaFi Capital, marking the first time Solana-based Jupiter accepted outside capital while expanding beyond swaps into perpetuals, lending and stablecoins.
Tickers mentioned: $BTC, $AVAX, $JUP, $SOL, $ZEC
Sentiment: Bearish
Price impact: Negative. The week’s liquidity concerns and continued selloffs pressured prices, with intraday volatility driven by ETF outflows and leveraged-liquidation activity.
Trading idea (Not Financial Advice): Hold. The near-term setup suggests sensitivity to macro signals and policy cues, but liquidity adaptations by major players could offer selective opportunities in risk-managed positions.
Market context: The period reflected broader crypto-market liquidity dynamics, policy expectations around the Federal Reserve, and ongoing flows into and out of crypto-related products that influence price trajectories and risk appetite.
Why it matters
The week highlighted how macro policy choices and liquidity conditions remain core to crypto pricing. The nomination of Kevin Warsh to head the Federal Reserve has sparked debate about whether policy will tilt toward stabilizing liquidity flows or sustaining tight funding conditions. Traders closely watched whether the nomination would translate into a more cautious stance on rate reductions and balance-sheet expansion, potentially placing continued pressure on risk assets, including digital currencies and DeFi platforms.
Meanwhile, institutional interest in on-chain analytics and risk-management tools continued to rise. TRM Labs’ unicorn status after a $70 million Series C underscores the market’s belief that blockchain intelligence and anti-fraud capabilities will be central to enterprise risk management as digital asset ecosystems grow in scale and complexity. The round, led by Blockchain Capital with participation from Goldman Sachs and others, signals ongoing appetite among traditional financial players to integrate crypto-native risk controls into broader financial operations.
On the product and network side, tokenization within Avalanche continued to gain momentum, a trend amplified by the involvement of traditional finance players. The platform’s growth in tokenizing real-world assets, combined with the launch of BlackRock’s BUIDL fund and the S&P Dow Jones partnership with Dinari, demonstrates how tokenized money markets, loans and indexes are becoming more central to institutional experimentation. The quarter’s numbers—an increase of tokenized real-world asset value by hundreds of percent year over year—underscore a shift from speculation toward utility in tokenized finance at scale.
In parallel, Jupiter’s infusion of outside capital marked a turning point for a Solana-based protocol that has long driven on-chain trading and liquidity aggregation. The ParaFi-led investment, coupled with the company’s expansion into on-chain perpetuals, lending and stablecoins, reinforces the trend of traditional funds seeking strategic exposure to fully on-chain ecosystems that promise deeper liquidity and more resilient product suites. The market also watched for the token’s performance, with Jupiter’s native token price rising in response to the news.
Still, the week wasn’t without turbulence. The Solana ecosystem saw a significant breach in treasury management on one DeFi platform, and other episodes highlighted the ongoing cybersecurity and operational risks that confront decentralized finance as activity scales. While some platforms have moved toward more centralized governance or governance-sharing arrangements, the overarching arc remains: innovation is accelerating, but risk controls must keep pace to sustain long-term confidence.
In aggregate, the DeFi universe ended the week with a mixed risk lens. While several projects advanced tokenization and institutional collaboration, broader market momentum remained tethered to policy signals and the health of traditional liquidity channels. The week’s data points—ranging from ETF withdrawals to multi-billion-dollar liquidation events—reflect a crypto market in transition: not only growing in sophistication but also increasingly sensitive to macro policy and systemic liquidity dynamics.
Avalanche tokenization hits Q4 high as BlackRock’s BUIDL expands onchain
Blockchain network Avalanche demonstrated notable institutional traction in tokenizing traditional assets during the fourth quarter. Total value locked (TVL) in tokenized real-world assets on Avalanche rose 68.6% quarter over quarter and nearly 950% year over year, surpassing $1.3 billion, according to Messari’s state-of-Avalanche Q4 2025 report. The surge was driven in part by the November launch of BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL), alongside broader deployments in tokenized money markets and loans.
The momentum was helped by strategic collaborations—Fortune 500 fintech FIS teamed with Avalanche-based Intain to bring tokenized loans to market, enabling securitization of billions of dollars in credit activity. The S&P Dow Jones Digital Markets 50 Index, launched in partnership with Dinari on Avalanche, tracks a cross-section of crypto-linked stocks and tokens and underscores the ongoing push to tie traditional benchmarks to on-chain exposure. The combination of these partnerships has supported a notable expansion of tokenized assets on the platform, contributing to a broader middleware layer that bridges real-world value with blockchain rails.
Traditional finance institutions are increasingly comfortable experimenting with tokenization, and the Securities and Exchange Commission’s more constructive stance toward crypto products has further lowered the regulatory headwinds facing such projects. This backdrop helps explain why on-chain asset issuance and tokenized funding mechanisms have gained traction on Avalanche, with real-world assets expanding beyond conventional crypto collateral and into more diversified financial instruments.
ParaFi Capital makes $35M investment in Solana-based Jupiter
Jupiter, a Solana-based on-chain trading and liquidity-aggregation protocol, announced a $35 million strategic investment led by ParaFi Capital. The deal marks the first time Jupiter has accepted external capital after years of bootstrapped growth. The investment included token purchases at market prices with no discount and an extended lockup period, settled entirely in Jupiter’s JupUSD stablecoin. The terms also included warrants allowing ParaFi to acquire additional tokens at higher prices, aligning long-term incentives with Jupiter’s growth trajectory.
The capital infusion comes as Jupiter broadens its product suite. After delivering a beta on-chain prediction market with Kalshi, the project rolled out JupUSD, a Solana-native stablecoin designed for on-chain settlement. Jupiter’s trading volume has surpassed $1 trillion in the past year, reflecting a rapid acceleration of liquidity and on-chain efficiency on Solana. The company has since expanded beyond swaps to perpetuals and lending, signaling a broader push to become an all-in-one on-chain liquidity hub.
Jupiter’s native token (JUP) responded to the news, rising roughly 9% over the prior 24 hours, underscoring investor appetite for Solana-native ecosystems that couple high throughput with diversified on-chain products. This momentum reflects a broader trend of cross-platform collaboration, where on-chain trading, governance, and liquidity provisioning are increasingly integrated with real-world asset workflows and institutional-grade risk controls.
Aave winds down Avara, phases out Family wallet in DeFi refocus
Aave Labs announced a strategic refocusing by winding down its umbrella brand Avara, which encompassed projects including the Family wallet and Lens, as the group doubles down on core DeFi initiatives. Stani Kulechov, Aave’s founder and CEO, noted that Avara is no longer required as the company concentrates on delivering broad DeFi access to users, with onboarding millions of users requiring purpose-built experiences rather than generic wallet interfaces.
The move aligns with Aave’s broader strategy to reallocate resources toward its flagship lending protocol and other core DeFi products. As governance and ecosystem partnerships evolve, projects like Lens have seen stewardship shifts to other collaborations, enabling Aave to focus on what it terms “DeFi for everyone.” The decision underscores the ongoing recalibration within the market as crypto firms chase product-market fit at scale and navigate regulatory expectations alongside user growth.
Kulechov indicated that the total effort within the team remains focused on unifying engineering and design toward a singular mission: bringing DeFi to a broad audience. The development trajectory suggests continued emphasis on user-friendly, accessible financial primitives and streamlined onboarding processes rather than sprawling, multi-brand architectures.
What to watch next
- Next batch of ETF outflow data and liquidity indicators to gauge whether funding conditions stabilize or deteriorate.
- Federal Reserve policy signals and potential implications for risk assets as the Warsh nomination progresses through confirmation and policy debate.
- Continued institutional participation in tokenization and on-chain finance, including Avalanche’s RWAs and partnerships with traditional finance players.
- Jupiter’s ongoing product expansion and ParaFi’s involvement in governance and token strategies.
Sources & verification
- Data on Bitcoin ETF outflows and price movements from Farside Investors and Cointelegraph coverage.
- Record of the Jan. 31 liquidation event reported by CoinGlass and related market data.
- TRM Labs’ Series C funding round and unicorn status as announced in its press release.
- Messari’s State of Avalanche Q4 2025 report, detailing RWAs and TVL growth.
- ParaFi Capital’s $35 million investment in Jupiter and the terms of the deal.
TLDR:
- Hyperliquid recorded over $5.5 million in daily fees, surpassing Ethereum and Tron in revenue generation.
- More than 2.32 million HYPE tokens were removed from supply through buybacks over the past 30 days.
- HIP-3 trading volume reached $5.21 billion daily, signaling rapid adoption of on-chain derivatives products.
- Hyperliquid’s perpetual DEX market share crossed 30% after five consecutive weeks of sustained growth.
Bitcoin and most major cryptocurrencies have faced sharp price swings over recent weeks. During the same period, Hyperliquid’s native token HYPE showed limited downside movement.
Trading data also points to growing activity on the protocol’s perpetual exchange. These shifts place Hyperliquid among the most closely watched on-chain derivatives platforms.
HYPE Shows Relative Price Strength Amid Crypto Volatility
Bitcoin moved from $90,000 to $60,000 before recovering toward $70,000. Over that period, HYPE remained near the $32 level, according to data shared by Wise Advice on X.
Since the recent market bottom, HYPE has gained about 60%. Meanwhile, open interest declined from $8.4 billion to $5.39 billion.
This combination shows price appreciation alongside falling leverage. Market data providers describe such patterns as a sign of spot-driven demand rather than speculative excess.
At the time of publication, CoinGecko data showed HYPE trading at $31.45 with a 24-hour volume of about $408 million. The token was down 5.25% daily and 2.48% weekly.
Hyperliquid’s revenue metrics have also moved higher. The protocol generated roughly $5.5 million in fees over the past 24 hours, exceeding Ethereum and Tron during the same window.
Buyback activity followed revenue growth. Platform data shows $5.25 million in buybacks in 24 hours, $25.9 million in seven days, and $62.9 million over 30 days.
Roughly 2.32 million HYPE tokens were removed from circulation during that period. This links protocol revenue directly to supply contraction.
Hyperliquid Expands On-chain Perps Share as Adoption and Volume Rise
HIP-3 trading activity reached a new all-time high with daily volume of $5.21 billion. Gold and silver contracts accounted for more than $20 billion over ten days.
That figure equals about 1% of daily COMEX volume. Two weeks earlier, HIP-3 accounted for less than 0.1% of comparable volume.
Cumulative HIP-3 statistics now show $55 billion in total volume, 39.9 million trades, and more than 103,000 users. Platform data attributes the growth to increased participation rather than trader rotation.
Perpetual decentralized exchange market share crossed 30% for the first time since September. The sector has recorded five consecutive weeks of growth.
Data shared by Wise Advice shows Hyperliquid expanding while rival venues remain stable or consolidate. Centralized exchange volumes continue to fluctuate with broader market conditions.
On-chain derivatives activity, however, has shown structural growth. Hyperliquid captured a growing portion of that flow.
The combination of stable pricing, rising revenue, expanding market share, and user growth places Hyperliquid among the strongest performers in the decentralized trading sector.
Bitcoin recently experienced a sharp sell-off that nearly dragged the price down to the $60,000 level before a swift bounce followed. Dip buying helped BTC stabilize near current levels, but this rebound alone does not confirm a trend reversal.
Instead, the move appears more like a temporary pause within a broader corrective phase, leaving investors questioning whether further downside lies ahead.
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This Is What Bitcoin Signals Suggest
One defining characteristic of bear markets is elevated Relative Unrealized Loss, which measures the dollar value of underwater coins relative to total market capitalization. During Bitcoin’s drop toward $60,000, this ratio surged to roughly 24%.
That level sits well above the typical bull-bear transition zone, placing the market firmly in bearish territory.
While the metric signals an intense bear regime, it remains below extreme capitulation levels historically seen above 50%. This suggests Bitcoin is undergoing an active capitulation process rather than reaching its final bottom. Selling pressure is widespread, but not yet exhausted, implying further volatility as the market seeks equilibrium.
Want more token insights like this? Sign up for Editor Harsh Notariya’s Daily Crypto Newsletter here.
Another lens into investor behavior is the distribution of Bitcoin supply among wallet sizes. Data shows wallets holding less than 0.01 BTC have been steadily increasing their share of supply. This group represents small retail participants who often react emotionally to price swings but are currently accumulating.
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At the same time, wallets holding between 10 and 10,000 BTC have shown mild net distribution during the dip. This divergence is notable because public sentiment on social platforms remains overwhelmingly bearish.
Despite negative commentary, small traders are quietly adding exposure, signaling belief that current prices offer value.
This imbalance suggests optimism has not fully reset. Ideally, deeper bear phases see retail capitulation align with bearish social metrics.
Until small retail supply begins declining, rebounds may struggle to gain lasting traction, limiting the upside of near-term recovery attempts.
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Bitcoin Continues To Witness Support
Despite price weakness, network activity presents a contrasting signal. Bitcoin has seen a sharp rise in new addresses over the past week. The number of investors conducting their first on-chain transaction increased by roughly 37%, indicating fresh participation entering the network.
Such growth reflects continued interest in Bitcoin as prices correct. New entrants often emerge during periods of volatility, attempting to position early for potential recoveries.
While not a guarantee of immediate upside, rising address activity suggests confidence in Bitcoin’s longer-term value proposition remains intact.
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This influx of new users can provide support during consolidation phases. However, if macro pressure persists, even strong network growth may struggle to offset broader risk-off conditions across financial markets.
BTC Price Levels To Watch
Bitcoin price is trading near $69,077 at the time of writing after rebounding from the $63,007 support during the recent crash. Aggressive dip buying prevented a deeper slide toward $60,000. This defense highlights strong demand at lower levels, at least in the short term.
Despite this bounce, downside risk remains elevated. The broader macro outlook suggests Bitcoin may still face further breakdowns in the coming weeks. A loss of the $63,007 support would reinforce a bearish continuation, with the next major downside target near $55,500 based on historical support zones.
A short-term recovery remains possible if fresh capital inflows persist. Rising new address activity could help Bitcoin consolidate and reclaim $71,672 as support. Securing that level would invalidate the immediate bearish setup and signal stabilization, though it would not fully negate the broader bear market structure.
TLDR:
- Bitcoin shows strong correlation with equities, placing short-term price action under macro and liquidity influence.
- Short-term holders sent over 94,000 BTC to exchanges at a loss, marking the largest capitulation of this correction.
- Options data shows negative gamma exposure, increasing the chance of sharp moves around key expiration dates.
- Long-term power-law valuation signals Bitcoin trades over 40% below trend despite ongoing macro pressure.
Bitcoin traded in volatile ranges as macro pressure and investor panic shaped near-term price action. Data showed heavy selling from short-term holders as the asset slipped below key technical levels.
At the same time, long-term valuation models signaled a widening gap between price and trend value. The divergence revealed a market pulled between liquidity stress and structural repricing forces.
Bitcoin Price Mispricing Tied to Macro Correlation and Options Structure
Bitcoin moved in step with U.S. equities during the latest pullback. Thirty-day correlations showed strong alignment with Nasdaq, S&P 500, and high-yield bonds.
Recency-weighted data confirmed the link with risk assets remained elevated. This pattern placed short-term direction under macro and liquidity influence rather than narrative-driven trading.
Lead and lag signals showed equities and credit markets moving before Bitcoin. According to figures shared by David (@david_eng_mba), the Nasdaq led Bitcoin by about four days, while the dollar index led by roughly ten days.
Options market positioning reinforced near-term uncertainty. Spot price hovered near the gamma flip zone, with resistance clustered near $70,000 and risk concentrated below that level.
Net gamma exposure remained negative, pointing to unstable price behavior. A squeeze score above the midpoint suggested sensitivity to sharp intraday moves.
Upcoming expiries added another layer of pressure. More than 15% of total gamma was set to roll off on February 13, with larger portions expiring later in February and March.
These expiries increased the probability of breakouts once hedging pressure faded. Until then, price action stayed confined between heavy put and call walls.
Short-Term Holder Capitulation Highlights Bitcoin Price Mispricing Gap
On-chain data showed panic-driven transfers from short-term holders. Darkfost (@Darkfost_Coc) reported daily average flows of over 94,000 BTC to exchanges at a loss.
The transfers occurred as Bitcoin dropped below $65,000. Exchange inflows from short-term holders often indicate intent to sell rather than reposition.
This behavior marked the largest capitulation event of the correction cycle. It reflected emotional reactions during rapid downside moves.
While near-term selling intensified, long-term valuation metrics pointed elsewhere. Power-law trend models placed fair value above $120,000.
The gap between market price and model value exceeded 40%. A negative Z-score signaled an oversold condition relative to historical norms.
Mean-reversion timelines projected gradual recovery over several months. These projections extended into mid and late 2026 based on trend reversion math.
Short-term volatility and long-term valuation now diverged sharply. Macro weakness dictated immediate price movement, while structural models framed a different trajectory.
Retail investors are scanning the crypto landscape for signs a bottom may be forming, hoping to time new purchases as market conditions potentially improve. A weekly briefing from Santiment on Saturday noted that retail traders are meta-analyzing price action, seeking indications that others are capitulating—a behavior that often marks troughs in bear markets. The term has surged as a top topic on social media, with Santiment tying the chatter to rising selling pressure. Google Trends data show a clear uptick in searches for “crypto capitulation” over recent days, underscoring how participants interpret price swings as signals rather than mere volatility. In this environment, Bitcoin has traded under pressure, dipping toward the $60,000 level on Thursday as part of a broader downtrend that has persisted for months.
The term capitulation describes a scenario where investors rush to exit positions out of fear that the market will not recover, a dynamic analysts monitor when assessing a market bottom. If the chorus of sellers grows loud enough that many participants capitulate at once, some interpret that as a sign that the worst may be behind them, even if others argue that bottoms in bear markets often arrive after multiple rounds of selling pressure. The debate remains a central theme as markets test psychological support levels and risk appetite remains fragile.
Capitulation signals and the coming bottom
“If everyone is waiting for ‘capitulation,’ the bottom might have already happened while they were waiting for a clearer sign,” Santiment cautioned in its assessment. The idea is that waiting for a definitive capitulation before buying can cause investors to miss a move that follows the initial flush of fear, a phenomenon that has played out in past cycles. Yet, several voices in the analyst community urge caution. Caleb Franzen, a market observer active on X, pointed out that capitulation is often a recurring theme in bear markets and that a single event rarely marks the ultimate bottom. “Bear markets typically experience multiple capitulation events,” Franzen wrote, highlighting the risk that the downturn may extend even after a strong capitulation signal appears.
As the debate unfolds, Bitcoin’s price action continues to weigh on sentiment. The flagship asset has seen volatility and regional price pressures, with a notable moment when it briefly struck a $60,000 level—an area not visited since October 2024 during this cycle’s slide. While some traders see this as an opportunity to accumulate, others caution that the move could be a continuation of the downtrend unless stronger catalysts emerge. The market’s complexity is underscored by a mix of on-chain data, macro considerations, and shifting liquidity conditions that collectively shape the near-term trajectory.
Further context comes from the broader sentiment gauges that traders monitor. The Crypto Fear & Greed Index, a composite measure of risk appetite across the market, slid deeper into an Extreme Fear zone in recent days, signaling a cautious stance among participants. This mood aligns with the period of heightened scrutiny around capitulation narratives and the ongoing debate over whether a bottom is in place or still distant. The blend of sentiment metrics and price dynamics creates a nuanced backdrop where several outcomes remain plausible in the weeks ahead.
In parallel, a separate thread of analysis emphasizes that capitulation—while relevant—may not be a single event but a process that unfolds over multiple episodes. CryptoGoos noted that true capitulation in Bitcoin had not yet materialized, a stance echoed by other analysts who stress that bottoms often require a confluence of confirmation signals, including on-chain activity, macro surprises, and investor positioning. The conversation reflects a market that is trying to quantify risk, distinguish genuine signaling events from noise, and position for a potential reversal when the confluence of factors tilts toward relief selling abating and demand reasserting itself.
Bitcoin’s recent movement sits at the center of these debates. Data from CoinMarketCap show the asset had fallen about 24% over the last 30 days, trading around $68,970 at the time of publication, with a low near $60,000 earlier in the week. The slide has kept risk managers vigilant, as fluctuations can influence leverage, funding rates, and liquidity across exchanges. In this environment, investors are weighing the potential for a sustainable bottom against the risk that the market could slip further before any durable recovery takes hold.
The market’s current state is a reminder that retail participation often shapes near-term moves, yet the longer-term trend remains dependent on a complex mix of factors, including macro policy expectations, liquidity dynamics, and how quickly market participants can absorb new information. While capitulation remains a focal point for many observers, the ultimate measure of a bottom will likely come from a broader pattern of price stabilization, sustained demand, and a shift in sentiment that signals a durable change in risk appetite.
Why it matters
For retail investors, the ongoing capitulation narrative frames risk tolerance and entry points. The possibility that a bottom could be forming—even if still contested—offers a potential upside scenario if buyers re-enter on perceived oversold conditions. For builders and traders, the discussion underscores the importance of risk controls, liquidity access, and the ability to distinguish meaningful capitulation signals from temporary price shocks. The broader market context—where macro indicators and regulatory developments can abruptly reframe risk sentiment—remains a critical backdrop for decision-making.
From a market-structure perspective, the unfolding dialogue around capitulation highlights how sentiment analytics, on-chain data, and price action interact to create a narrative about participation. While the data points discussed—ranging from Santiment’s retail-trader observations to Google Trends spikes and the Crypto Fear & Greed Index—offer a composite picture, they do not guarantee a bottom. Instead, they contribute to a framework that investors can use to calibrate expectations, manage risk, and prepare for a potential shift in momentum as the market weighs new information and potential catalysts.
What to watch next
- Watch for any sustained price stabilization around key support zones near $60,000 and above, which could indicate a base forming.
- Monitor capitulation signals and on-chain activity for confirmation that selling pressure is abating, not simply cooling temporarily.
- Track Google Trends and social sentiment to assess whether interest in capitulation remains elevated or begins to fade as prices stabilize.
- Follow macro developments and regulatory updates that could shift risk appetite and liquidity conditions across markets.
- Observe price action around major technical levels and liquidity at major exchanges, which can influence short-term volatility and trader positioning.
Sources & verification
- Santiment weekly summary on retail capitulation and bottom signals, including links to the full written report.
- Google Trends data showing rising searches for “crypto capitulation” during Feb 1–Feb 8, 2026.
- Bitcoin price data and 30-day performance from CoinMarketCap.
- On-chain and market commentary from analysts referencing capitulation dynamics and multiple capitulation events in bear markets.
- CryptoFear & Greed Index readings indicating current sentiment levels (Extreme Fear).
Retail investors are scrutinizing the crypto market for signs that it may have bottomed out to gauge when to buy more crypto assets, according to crypto sentiment platform Santiment.
“Retail traders are trying to meta-analyze the market, looking for signs of others quitting to time their own entries, which often happens near bottoms,” Santiment said in a report on Saturday.
Santiment has linked this to the word “capitulation,” which has become a top-trending crypto term on social media, according to the platform’s data.
The term describes investors selling their holdings out of fear that the market won’t recover, a scenario that analysts typically monitor when assessing whether the market has reached a bottom.
“Capitulation” may have already happened, says Santiment
“If everyone is waiting for ‘capitulation,’ the bottom might have already happened while they were waiting for a clearer sign,” Santiment said.
Meanwhile, Google Trends data shows searches for “crypto capitulation” rising from a score of 11 to 58 between the weeks ending Feb. 1 and Feb. 8.
Crypto investors are usually cautious about calling a market bottom too soon. History shows prices can keep falling even when most people think the worst is over.
Market analyst Caleb Franzen said in an X post on Saturday that while capitulation is the “word of the week,” many investors don’t understand that “bear markets typically experience multiple capitulation events.”
It comes as Bitcoin’s (BTC) price dropped as low as $60,000 on Thursday, a level it hasn’t seen since October 2024, amid its ongoing downtrend.
Some analysts are skeptical of the “cycle bottom”
Crypto analyst Ted said in an X post on Friday that “yesterday’s dump looks like capitulation, but it’s not the cycle bottom.”
Echoing a similar sentiment, crypto analyst CryptoGoos said, “We haven’t seen true Bitcoin capitulation so far.”
Related: Over 23% of traders now expect interest rate cut at next FOMC meeting
Over the past 30 days, Bitcoin has fallen 24.27%, trading at $68,970 as of publication, according to CoinMarketCap.
The Crypto Fear & Greed Index, which measures overall crypto market sentiment, fell further into the “Extreme Fear” territory on Sunday, with a score of 7, signaling extreme caution among investors.
Magazine: Bitcoin’s ‘biggest bull catalyst’ would be Saylor’s liquidation: Santiment founder
The Bitcoin network’s mining difficulty has once again moved in a volatile direction, highlighting how external shocks—from extreme weather to regulatory pressure—continue to ripple through the ecosystem. In the most recent adjustment window, the metric dropped about 11.16% in the last 24 hours, marking the steepest one-day decline since China intensified its 2021 crackdown on crypto mining. With the adjustment taking effect at block 935,429, the difficulty sits around 125.86 terahashes and the network’s average block time hovers near 9.47 minutes, just shy of the 10-minute target. Industry observers note that the next adjustment, set for February 20, is forecast to rebound by roughly 5.63% to about 132.96 T, according to CoinWarz data. The sequence underscores how sensitive the network remains to a mix of weather-related outages, shifting energy economics, and ongoing structural changes within the mining sector.
Key takeaways
- Bitcoin mining difficulty fell by about 11.16% in the last 24 hours, the largest one-day drop since the 2021 crackdown in China.
- Current difficulty is 125.86 T at block 935,429, with an average block time near 9.47 minutes, underscoring continued efficiency pressure in the network.
- The next adjustment on February 20 is projected to rise about 5.63% to roughly 132.96 T, signaling a partial recovery after the recent pullback.
- A severe winter storm in January—Winter Storm Fern—disrupted power grids across 34 states and trimmed US miner hashrate, illustrating how weather can translate into measurable network effects.
- Foundry USA, the world’s largest mining pool by hash rate, briefly saw its capacity cut by around 60% during the storm, shrinking from about 400 EH/s to 198 EH/s before recovering to above 354 EH/s and maintaining a sizable market share.
- January’s broader picture showed the Bitcoin network hashrate retreating to a four-month low as miners reallocate to compute workloads beyond traditional mining.
Tickers mentioned: $BTC
Market context: The ongoing mix of supply-side disruption (weather-related outages), regulatory pressures, and energy-market dynamics continues to shape miner behavior and network security, with a notable tilt toward more flexible, high-availability compute deployments beyond pure traditional mining.
Why it matters
Bitcoin’s security and block production depend on the global distribution of mining power. The recent difficulty drop—driven in part by infrastructure outages tied to Winter Storm Fern—signals how external shocks can temporarily reduce the aggregate hashing power securing the network. The subsequent projected rebound in the next adjustment suggests a partial normalization as operations restart and energy systems stabilize. The episodes also highlight a broader resilience dynamic: as traditional mining pools feel weather- and grid-related constraints, some miners have pivoted toward diversified compute applications, including AI data centers and other high-performance computing tasks, which can alter the geographic and economic makeup of hashrate distribution (CRYPTO: BTC).
The storm’s impact underscores the fragility of mining-dependent infrastructure. The disruption forced US-based miners to curb energy usage and pause operations, translating into a lower total network hashrate and a temporary easing of the computational pressure that underpins Bitcoin’s protocol security. Foundry USA—widely recognized as the largest pool by hashrate—reported a dramatic swing, with hashing power plummeting from nearly 400 EH/s to about 198 EH/s in the storm’s wake, just as the grid faced outages across broad swaths of the country. The fallout was nonetheless transitively mitigated as operations regained traction and hashing power rebounded in the days that followed, reflecting a resilient but stressed sector laced with concentrated capacity.
Even as the storm receded, the broader January data painted a picture of a network navigating a quieter, more cost-conscious cycle. The total Bitcoin hashrate declined to a four-month low, a reflection of both macro crypto market headwinds and miners’ strategic realignment toward compute tasks that can leverage surplus energy during off-peak periods. This pattern aligns with a wider industry trend: operators are increasingly balancing long-term capital commitments with shorter-term flexibility to adapt to energy prices, grid reliability and shifting demand profiles for computing power beyond proof-of-work competition alone.
Why it matters
The sequence of events surrounding mining difficulty and hashrate carries implications for both the security architecture and the economics of running a mining operation. A lower difficulty can ease block production temporarily, potentially affecting miners’ revenue dynamics, especially for those with higher energy costs or less efficient hardware. Conversely, the forecasted rebound in the next adjustment hints at a prompt re-consolidation of hashrate, which could re-tighten margins for smaller operators and increase the concentration of power among larger pools with greater resilience to weather-related shocks.
From a market perspective, the volatility in hashrate can coincide with price fluctuations, adding another layer to the already complex relationship between mining activity and Bitcoin’s spot market. The January and February patterns suggest a sector that remains highly reactive to externalities—weather, policy signals, and the evolving balance of energy economics—while continuing to innovate around operational efficiency and diversification of compute workloads. Those dynamics will influence how quickly the network can absorb future disruptions and how miners price risk in a landscape where energy costs, hardware depreciation, and regulatory risk remain in sharp relief.
What to watch next
- February 20: The next mining-difficulty adjustment and the degree of rebound toward 132.96 T.
- Restart and stabilization of Foundry USA’s hashrate; monitoring for any long-term shifts in pool market shares.
- Any policy or grid reliability developments that could affect U.S. mining operations and energy availability.
- New data on how miners allocate capacity between traditional mining and other compute workloads, including AI data centers.
Sources & verification
- CoinWarz difficulty charts and block data for Bitcoin (CRYPTO: BTC) at block 935,429 and the projected February adjustment.
- AccuWeather reporting on Winter Storm Fern and its impact on regional power infrastructure in the United States.
- Hashrate Index pool-market-share data reflecting Foundry USA’s post-storm recovery and market position.
- Cointelegraph reporting on January’s hashrate declines and the broader context of miner activity during weather events.
Bitcoin mining difficulty, storms and the path to the February adjustment
Bitcoin (CRYPTO: BTC) mining difficulty dipped about 11.16% over the past 24 hours, underscoring how swiftly external conditions can influence the security and economics of the network. The current reading places the difficulty at roughly 125.86 T, with the adjustment taking effect at block 935,429. The network’s average block time sits at about 9.47 minutes, a hair under the 10-minute target that helps maintain predictable issuance and transaction throughput. CoinWarz tracks the data behind the scene, and projections for February 20 show a likely rebound of around 5.63%, lifting the metric toward 132.96 T. This sequence—sharp decline followed by expected recovery—was anticipated by observers who have watched a pattern emerge since the 2021 China crackdown, when mining operations shifted dramatically in response to policy changes and market conditions.
The context for the latest adjustment owes much to a storm season that has repeatedly stressed the Bitcoin network’s fundamentals. Winter Storm Fern swept across much of the United States in January, disrupting electrical infrastructure and forcing curtailment of miner energy use in 34 states across roughly 2,000 square miles. The immediate consequence was a measurable throttling of the network’s total hashrate and a temporary softening of the hash-power centralization that had been building in certain corridors of mining activity. As outages and grid instability mounted, the resilience of large-scale operators—bolstered by diversified energy sourcing and operational cadence—helped the sector rebound once the storm abated.
One consequence of the weather-driven disruption was its impact on the largest mining pool by hashrate: Foundry USA. The bloc of hashing power belonging to this operator was temporarily slashed by around 60%, dropping from near 400 EH/s to about 198 EH/s during the peak of Winter Storm Fern. Hashrate Index corroborates the shift in market dynamics, noting how the pool’s share waxed and waned with the storm’s intensity. In the days that followed, Foundry USA’s hashrate recovered to more than 354 EH/s, renewing its status as a dominant force in the network with a market share hovering around 29.47% at the time of reporting. The broader narrative is that while the storm caused an abrupt pullback, the sector’s capacity to bounce back remained evident as miners reconnected with power sources and recommenced operations.
Beyond the storm, January’s overall momentum pointed to a four-month low in total Bitcoin hashrate, signaling a period of caution as miners assess the balance between energy costs, hardware depreciation, and the macro crypto environment. The combination of weather-related outages and market headwinds has prompted a cautious stance among some operators, who are re-evaluating risk profiles and exploring adjacent compute workloads to maximize asset utilization during periods of mining downtime. The result is a nuanced picture: even as the next difficulty adjustment points to a potential rebound, the path forward may involve continued strategic shifts as the industry recalibrates in response to evolving incentives and constraints.
The shift in expectations for U.S. monetary policy is spreading through markets as traders digest the potential implications of a hawkish Fed chair nominee. With Fed watchers weighing the odds of a March rate cut, data from CME Group’s FedWatch tool shows the probability cresting at about 23%—up from roughly 18.4% late last week. The move signals a re-pricing of near-term easing, even as the broader consensus remains modest about the size of any forthcoming cuts. The spike comes as Donald Trump’s January nomination of Kevin Warsh to lead the Federal Reserve raises questions about how aggressively the central bank will continue to reduce accommodation, especially if the new chair advocates shrinking the balance sheet. Powell’s current term ends in May, a factor that injects political nuance into policy timing and market expectations.
Markets have traditionally responded to shifts in liquidity and rate expectations, and the current dynamic underscores how a single nomination can ripple through asset prices. In crypto markets, the relationship is nuanced: easing liquidity tends to support risk assets, while tighter conditions can constrain funding and access to capital. The debate over Warsh’s approach—especially his stance on the central bank’s balance sheet—has amplified concerns about financing conditions, which in turn can influence portfolios across equities, commodities, and digital assets. The linked data and commentary reflect a broader narrative in which policy trajectory and balance-sheet strategy are seen as primary drivers of liquidity in the months ahead.
Analysts have pointed to Warsh’s past views on the Fed’s balance sheet as a potential source of policy risk. He has argued that the balance sheet is “trillions larger than it needs to be,” a characterization that underscores the debate over whether a shrinking balance sheet could tighten financial conditions. If the new chair pursues a deliberate reduction in liquidity, markets may Face a period of heightened sensitivity to macro signals, with consequences for riskier assets that rely on easy financing. Krakken’s global economist Thomas Perfumo described Warsh’s nomination as sending a mixed macro signal to investors, suggesting that liquidity dynamics could shift without a clear, immediate direction. In this context, some observers caution that the Fed may pivot more slowly toward easing if balance-sheet normalization becomes a priority, complicating the trajectory of asset prices across markets.
The rhetoric around policy has also interacted with other market dynamics. Earlier in the year, concerns about hawkish bias contributed to declines in certain precious metals and other risk-sensitive assets, illustrating how policy expectations can ripple beyond equities into broader markets. Market participants have emphasized that the Fed’s policy stance will remain a focal point, with the potential to influence how crypto assets—especially those sensitive to liquidity and funding costs—behave in a volatile macro environment. The conversation around Warsh continues to evolve as investors monitor official statements, committee communications, and potential congressional signals that could shape policy timing and tone. For context, one of the linked pieces explores how Fed rate decisions can affect crypto holders, underscoring the linkage between traditional financial conditions and digital-asset markets.
Market reaction and policy expectations as Warsh nomination stirs caution
Bitcoin (CRYPTO: BTC) and other major digital assets could find themselves navigating a scenario in which the Fed’s balance-sheet strategy and rate path become more influential than in the recent past. The discussion around Warsh’s stance fills a gap in the market’s understanding of how aggressively the central bank will normalize policy, particularly if rate cuts are viewed as contingent on liquidity conditions rather than purely economic data. The scenario described by market analysts includes a tension between supportive financial conditions for risk assets and the prospect of a tighter funding environment if the balance sheet is reduced. The potential for a slower easing cycle or a longer period of higher rates could temper enthusiasm for speculative assets, even as demand from long-term investors remains a factor in broader market dynamics. This cross-asset sensitivity underscores why traders are watching Fed communications with heightened attention, recognizing that even modest shifts in the policy mix can alter capital flows and risk sentiment across markets.
As policymakers and markets await more clarity, the conversation around liquidity remains central. Warsh’s nomination has intensified worries about a “lower-liquidity environment” if policy steps move toward balance-sheet contraction. The fear is not limited to traditional markets; crypto-specific funding channels—such as margin lending, swaps, and decentralized finance—could feel the impact of tighter credit conditions if the central bank signals a cautious approach to balance-sheet normalization. The broader takeaway is that the policy pathway now carries an additional layer of uncertainty, with the potential to influence price discovery in both conventional and digital-asset markets. The YouTube commentary embedded above captures some of the real-time reactions and expert assessments shaping this narrative, illustrating how political developments dovetail with macroeconomic policy in a rapidly evolving environment.
In this context, market participants are recalibrating their expectations for how quickly the Fed might shift from tightening to easing, and how the new leadership could interpret the central bank’s own balance in the years ahead. The discussion also intersects with ongoing debates about crypto liquidity, funding rates, and the resilience of digital-asset markets in the face of tightening macro conditions. While some observers argue that a hawkish tilt would dampen risk appetite, others contend that a well-communicated framework and credible policy path could stabilize expectations and reduce volatility over time. The evolving discourse highlights the delicate balance between policy credibility and market confidence, a dynamic that will likely shape both traditional and crypto markets in the near term.
Analysts emphasize that the March FOMC meeting remains a pivotal moment for policy signaling. While a 25 basis-point cut remains a modest possibility, expectations of a larger cut or aggressive easing appear unlikely under the current dialogue surrounding balance-sheet management. As investors integrate these considerations, they are closely tracking the CME FedWatch data, official statements from the Fed, and the evolving commentary surrounding Warsh’s nomination. The implications are not limited to rate paths; they extend to liquidity, credit conditions, and the ability of market participants to access funding in a climate where policy choices carry more weight than was anticipated even a few months ago.
Why it matters
The intersection of Fed policy expectations and crypto markets matters for several reasons. First, liquidity remains a foundational driver of asset prices. If the Fed signals a path toward balance-sheet reduction or maintains a higher-for-longer rate stance, funding conditions could tighten, increasing the cost of capital and reducing speculative activity in risk-on segments, including digital assets. Second, the alignment—or misalignment—between policy signals and market expectations can create abrupt shifts in risk sentiment, potentially triggering faster moves in crypto prices than in traditional markets during periods of macro uncertainty. Third, the nomination of Warsh, which has become a focal point for market analysts, underscores how political dynamics can influence monetary policy and, by extension, the liquidity environment that crypto traders rely on for leverage and liquidity provision. Finally, the broader macro backdrop—ranging from inflation dynamics to credit conditions—continues to shape how investors allocate across asset classes and risk profiles, with crypto assets often sensitive to shifts in liquidity and market sentiment.
For traders and builders in the crypto space, these developments highlight the importance of robust risk management and hedging strategies that account for macro-driven volatility. The potential for a tighter policy regime means that on-chain liquidity provision, cross-asset funding costs, and risk premia across DeFi and centralized exchanges could experience heightened sensitivity to macro headlines. While policy uncertainty can compress near-term gains, it can also create opportunities for long-term participants who position themselves for resilience in evolving liquidity dynamics. As the Fed’s policy conversation progresses, the crypto ecosystem will continue to watch for signals that indicate whether liquidity will be favored or constrained in the months ahead.
What to watch next
- March FOMC decision and summary of the committee’s projections, including any changes to the rate path.
- Public statements or confirmations from Kevin Warsh regarding balance-sheet policy and duration of any normalization steps.
- Updates on liquidity indicators and market funding conditions, including crypto-specific funding metrics and DeFi activity.
- Market reactions to Fed communications, and any revisions to the CME FedWatch probability for March or subsequent meetings.
- Regulatory or policy signals that could influence liquidity, including broader macro trends and currency-market dynamics that affect cross-asset flows.
Sources & verification
- CME Group FedWatch tool data showing March rate-cut probabilities.
- Cointelegraph article: Kevin Warsh officially picked as Federal Reserve chair.
- Cointelegraph explainer: Impact of Fed interest rates on crypto holders.
- Cointelegraph coverage referencing Bitcoin and macro policy dynamics in relation to liquidity and risk sentiment.
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