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Bitcoin traders have aggressively increased short positions following recent liquidations, driving funding rates across major exchanges to their most negative levels since August 2024. According to data from Santiment, a similar extreme in bearish positioning previously marked a major bottom for Bitcoin.

In August 2024, funding rates dropped deeply below zero as fear dominated the market and traders overwhelmingly bet on further declines. Instead of continuing lower, Bitcoin reversed course. The crowded short trade was unwound, helping fuel a strong rebound. From that low, Bitcoin surged roughly 83 percent over the following four months.

Funding rates in perpetual futures markets are designed to keep futures prices aligned with spot prices through periodic payments between traders. When funding is negative, short sellers pay long traders, signaling heavy bearish positioning. Extremely negative aggregated rates indicate that a large portion of the market expects prices to fall.

Many of these short positions are leveraged, meaning traders borrow capital to increase exposure. If prices rise instead of fall, losses can mount quickly, triggering forced liquidations. When a large number of short positions are closed at once, the resulting buying pressure can drive prices sharply higher in what is known as a short squeeze.

Santiment also highlighted market behavior following a liquidation event on Binance on October 10, 2025, when long liquidations accelerated a price drop. Afterward, traders shifted heavily into shorts, recreating an imbalance visible in funding rate data.

Current metrics show sentiment once again leaning strongly bearish. While extreme short positioning does not guarantee an immediate rally, Santiment noted that such crowded trades increase the risk of a rapid upside move if short sellers are forced to cover. Based on broader sentiment indicators, the firm suggested that a liquidation driven rebound may be more likely than a voluntary exit from these positions.

Bitcoin moved largely within a range over the past week, with each breakout attempt quickly losing momentum. While the market recovered from the sharp sell off that peaked on February 6, prices remain far below the highs recorded in the fourth quarter of 2025.

The recent downturn saw Bitcoin fall to 60,000 dollars for the first time in more than a year, while many altcoins dropped between 20 and 30 percent in a single day. Bitcoin then staged a strong rebound, climbing 12,000 dollars to briefly touch 72,000 dollars. However, selling pressure soon returned, pushing the asset back toward 68,000 dollars over the weekend.

For several days, Bitcoin traded between 68,000 and 72,000 dollars before another rejection near the upper boundary sent it down to 66,000 dollars on Wednesday and 65,000 dollars on Thursday. Following the release of softer than expected United States inflation data, Bitcoin briefly rose to 67,600 dollars but quickly pulled back to around 66,000 dollars, leaving it close to where it stood a week ago.

Altcoins showed mixed performance. XRP, BNB, HYPE, and SOL posted notable losses, while BCH, XMR, and HBAR gained as much as 9.5 percent.

Market capitalization stands at 2.37 trillion dollars, with 24 hour trading volume at 110 billion dollars. Bitcoin trades near 67,200 dollars, Ethereum around 1,970 dollars, and XRP near 1.38 dollars.

Key Developments This Week

Binance converted its entire 1 billion dollar SAFU fund into Bitcoin, acquiring approximately 15,000 BTC over several weeks.

BlackRock expanded access to its USD Institutional Digital Liquidity Fund through Uniswap in partnership with Securitize, prompting a sharp rally in UNI.

Discussions between banks and the crypto industry over stablecoin yields continued without a final agreement as regulatory talks approached a key deadline.

Robinhood launched the public testnet of Robinhood Chain, an Ethereum Layer 2 network built on Arbitrum to support tokenized assets.

Mining firm Cango sold more than 300 million dollars worth of Bitcoin as profitability pressures increased amid declining network difficulty.

Author Robert Kiyosaki stated that he considers Bitcoin a stronger investment than gold due to its capped supply, although he prefers holding both assets.

The latest Consumer Price Index data for January 2025 shows inflation easing more than expected, offering a potentially positive signal for risk assets. Annual inflation came in at 2.4 percent, slightly below forecasts of 2.5 percent. Core CPI, which excludes food and energy, matched expectations at 2.5 percent. On a monthly basis, headline inflation rose just 0.2 percent, marking the slowest increase since last May.

Heather Long, chief economist at Navy Federal Credit Union, noted that falling prices for gas, used cars, and medical care helped cool overall inflation, even as utilities and transportation costs moved higher. She described the report as encouraging, though she warned that tariffs could still create another temporary increase in prices.

Bitcoin has historically experienced sharp price swings following CPI releases, as traders reassess expectations for monetary policy. In the minutes after the data was published, Bitcoin briefly climbed to 67,600 dollars before easing back toward 67,200 dollars, reflecting an initial but cautious reaction.

The more meaningful impact may come from how the US Federal Reserve interprets the data. If policymakers view the cooling inflation trend as sustainable, it could strengthen the case for interest rate cuts later this year, a development that would typically support risk assets such as cryptocurrencies. However, any indication that rates will remain higher for longer could limit upside momentum and keep volatility elevated in the near term.

Bitcoin held above 66,000 dollars on Friday, though it remains down roughly 30 percent over the past month. Research from Alphractal shows that Bitcoin’s long term Realized Cap Impulse has shifted into negative territory for the first time in three years, a development that has historically preceded extended market downturns.

Shift in Bitcoin’s Capital Structure

The Realized Cap Impulse measures long term changes in realized capitalization to determine whether fresh capital is entering the network or whether inflows are slowing. A negative reading suggests that new investment is weakening, demand is no longer absorbing supply at the same rate, and the network’s structural growth is contracting.

Alphractal noted that in previous cycles, each time this metric turned negative it was followed by major corrections or prolonged bear markets. The firm linked this trend to supply and demand dynamics, explaining that when available supply outweighs incoming capital, price pressure typically builds to the downside.

Unlike traditional market capitalization, realized capitalization values Bitcoin at the price it last moved on chain. This approach reflects actual capital committed to the network rather than short term price swings, offering a clearer view of long term investor behavior. With the indicator now negative again, Alphractal suggests the current cycle may be entering a phase of weakening capital inflows.

The firm’s founder, Joao Wedson, added that even with exchange traded funds accumulating and large institutions such as Strategy expanding their holdings, demand has not been strong enough to offset periods when supply exceeds buying interest.

Heightened Global Uncertainty

On chain trends are unfolding against a backdrop of elevated macro uncertainty. Data from CryptoQuant shows that the Global Uncertainty Index has climbed to a record high, surpassing levels seen during the September 11 attacks, the Iraq War, the 2008 financial crisis, the Eurozone debt crisis, and the Covid 19 pandemic.

According to CryptoQuant, the current environment reflects markets struggling for direction, more cautious capital flows, and risk being priced more aggressively. With geopolitical, economic, and political pressures occurring simultaneously, volatility may persist rather than fade quickly.

Historically, extreme uncertainty has prompted major shifts in market positioning as participants reassess exposure. While such periods often encourage defensive strategies, they have also coincided with large scale reallocations of capital.

Another week is ending with a fresh wave of crypto options contracts set to expire as spot markets continue to slide.

About 38,000 Bitcoin options contracts expire on Friday, February 13, representing a notional value of roughly 2.5 billion dollars. This figure is slightly higher than last week’s expiry. Meanwhile, the broader crypto market has shed around 125 billion dollars since the beginning of the week, reflecting worsening sentiment and continued withdrawals from both retail and institutional investors.

Bitcoin Options Expiry

This week’s Bitcoin contracts show a put to call ratio of 0.76, indicating more call options than puts are expiring. According to Coinglass, the max pain level stands near 75,000 dollars, which is above the current spot price, leaving many contracts out of the money at expiry.

Open interest remains concentrated at the 60,000 dollar strike price and is building at 50,000 dollars, where more than 1 billion dollars in contracts are positioned on Deribit as bearish sentiment grows. Across all exchanges, total open interest in Bitcoin options has climbed to 36.6 billion dollars this month.

Derivatives analytics firm Laevitas reported the presence of a bear put spread strategy on Deribit. This strategy involves purchasing a higher strike put while selling a lower strike put with the same expiration date.

Deribit noted that with Bitcoin stabilizing and trading volumes easing from panic driven levels, traders are watching whether expiry will pull prices toward 75,000 dollars or pave the way for a new directional move.

Analytics provider Greeks Live stated that put options continue to dominate activity, with more than 1 billion dollars in Bitcoin puts traded in a single day, accounting for 37 percent of total volume. Most of these contracts are out of the money, concentrated between 60,000 and 65,000 dollars. This positioning suggests that institutions expect further downside over the next one to two months.

In addition to Bitcoin contracts, around 217,000 Ethereum options are also expiring today, carrying a notional value of 406 million dollars. The max pain level for Ethereum stands at 2,150 dollars, with a put to call ratio of 0.89. Total open interest in Ethereum options across exchanges is approximately 7 billion dollars. Combined, the total value of today’s crypto options expiries is close to 2.9 billion dollars.

Spot Market Outlook

Total crypto market capitalization has fallen another 1.5 percent to 2.34 trillion dollars as selling pressure persists. Bitcoin slipped to just above 65,000 dollars in late Thursday trading and hovered near 66,000 dollars during Friday’s Asian session.

Market analysts largely maintain a bearish stance, with some projecting a potential bottom near or below Bitcoin’s realized price of 55,000 dollars. Ethereum remains under pressure below 2,000 dollars and recently touched an intraday low of 1,900 dollars. Continued weakness in Bitcoin could weigh further on Ethereum in the weeks ahead.

Crypto lender BlockFills has temporarily halted client transfers as liquidity strains surface. The firm attributed the move to the latest sharp downturn in the digital asset market.

BlockFills announced that it has temporarily paused client deposits and withdrawals due to heightened market volatility and challenging financial conditions. The decision, made last week, was described as a precautionary step aimed at safeguarding both clients and the company.

Pause on Client Transfers

In its official statement, BlockFills explained that although deposits and withdrawals are currently on hold, clients can still access trading services. This includes opening and closing positions in spot and derivatives markets, along with certain other activities permitted under specific conditions set by the company.

The suspension could impact roughly 2,000 institutional clients, including asset managers and hedge funds. BlockFills serves only investors who hold at least 10 million dollars in crypto assets. In 2025, these clients generated more than 60 billion dollars in trading volume on the platform.

The company emphasized that its leadership team is working closely with investors and clients to address the liquidity challenges and normalize operations.

BlockFills stated that it remains dedicated to transparent communication and client protection. Management has been collaborating directly with stakeholders to resolve the issue as quickly as possible and restore liquidity. The firm added that it has maintained ongoing discussions with clients throughout the process, hosting information sessions and giving them opportunities to raise questions with senior executives.

Market Turbulence

The decision comes during a wider downturn in the cryptocurrency market and recalls earlier periods of industry stress, such as the 2022 collapse of FTX and other crypto lenders. Bitcoin began to slide on October 10 after a social media post by Donald Trump concerning tariffs, a development that fueled volatility and triggered nearly 20 billion dollars in liquidations across the market.

In the months that followed, Bitcoin continued its decline, dropping below 65,000 dollars, more than 45 percent beneath its October peak. On February 5, it touched a year to date low of 60,008 dollars. Uncertainty surrounding stalled crypto legislation in the United States has also weighed heavily on investor sentiment.

SEC Chair Paul Atkins is facing pressure from Democratic lawmakers over the agency’s evolving approach to crypto regulation, particularly its decision to pause the 2023 lawsuit against Tron founder Justin Sun.

During a House Financial Services Committee hearing, Representative Maxine Waters questioned why the SEC requested a stay in the case earlier this year. The original lawsuit accused Sun of orchestrating unregistered securities sales tied to TRX and BTT and manipulating trading volumes. Since the pause, Sun has become a major backer of Trump linked crypto ventures, reportedly purchasing billions in WLFI tokens tied to World Liberty Financial. Waters also cited recent public allegations from Sun’s former partner claiming she holds evidence of token manipulation.

Atkins declined to comment on the specifics of the case, stating he cannot discuss individual enforcement matters publicly but would be open to confidential discussions where permitted. When pressed about potential conflicts involving Trump affiliated businesses, he said he could not speak to the Trump family’s activities.

Lawmakers also raised concerns about the SEC dropping several high profile cases in 2025, including actions against Binance, Ripple, Coinbase, Kraken, and Robinhood. The Binance case drew particular scrutiny after Trump pardoned former CEO Changpeng Zhao and a stablecoin linked to World Liberty Financial was reportedly used in a 2 billion dollar investment in the exchange.

Representative Stephen Lynch criticized the agency’s recent direction, pointing to reputational damage and asking for clarity on enforcement decisions. Atkins responded that the SEC continues to maintain a strong enforcement program.

However, data from Cornerstone Research shows total SEC enforcement actions fell 30 percent in 2025, while crypto related cases declined by 60 percent. Atkins, who became chair in April 2025 following Gary Gensler’s departure, has consistently signaled a move away from the prior administration’s litigation heavy strategy toward what he describes as a more balanced regulatory framework.

Binance has completed the full conversion of its 1 billion dollar Secure Asset Fund for Users into Bitcoin, confirming the purchase of a final 4,545 BTC and bringing the total reserve to 15,000 BTC. With Bitcoin trading around 67,000 dollars, the fund is now valued at just over 1 billion dollars.

The exchange executed the transition through multiple transactions between February 2 and February 12, finishing the process well within the 30 day window it outlined on January 30. The dedicated SAFU wallet address, which Binance has made public, now reflects the updated Bitcoin balance.

SAFU was originally established in 2018 as an emergency insurance pool designed to compensate users in extreme scenarios such as security breaches. In April 2024, Binance converted the reserve entirely into USDC, citing stability concerns at the time. The latest move represents a complete reversal of that strategy, signaling renewed confidence in Bitcoin as a long term reserve asset rather than relying on dollar pegged stablecoins.

Binance stated that it views Bitcoin as the leading long term store of value within the crypto market and said it will rebalance the fund if its value falls below 800 million dollars due to price volatility. The decision effectively ties user protection funds directly to Bitcoin’s market performance.

The shift also arrives as Binance maintains a dominant position in global crypto trading. According to recent data, the exchange accounts for roughly 41 percent of spot trading volume among the top ten platforms in 2025, alongside a significant share of Bitcoin perpetual futures activity and stablecoin reserves.

Meanwhile, Bitcoin is trading near 67,300 dollars, posting modest daily gains but remaining under pressure on longer time frames. The asset is down nearly 5 percent over the past week, around 24 percent over two weeks, and close to 30 percent over the past month. It also remains more than 46 percent below its October 2025 all time high above 126,000 dollars, highlighting the broader market correction even as Binance deepens its exposure to BTC through its insurance reserve.

Ethereum has faced sustained volatility since October, with selling pressure intensifying over the past month as the asset struggles to reclaim the 2,000 dollar level. While many investors have grown frustrated with the prolonged weakness, Fundstrat Head of Research Tom Lee believes the current downturn fits a familiar historical pattern and could signal that a bottom is approaching.

Speaking at a conference in Hong Kong, Lee highlighted that since 2018 Ethereum has experienced at least eight major drawdowns of more than 50 percent. One of the most notable was a 64 percent decline between January and March last year. According to Lee, every one of those deep corrections ultimately formed a V shaped bottom, with ETH recovering at roughly the same speed as it fell. In his view, this repeated structure suggests the present decline does not represent a breakdown in Ethereum’s long term trajectory.

Lee also cited technical analysis from veteran market strategist Tom DeMark, who believes Ethereum may need to revisit the 1,890 dollar area to form what he calls a perfected bottom. Lee noted that current price action closely mirrors previous major turning points, including late 2018, late 2022, and April 2025. These historical parallels reinforce his view that ETH may be in the final stages of its correction phase.

Rather than attempting to pinpoint the exact low, Lee stressed that the magnitude of the drawdown is what matters most. Sharp declines of this scale have historically presented opportunity rather than signaling structural failure. From his perspective, long term investors should be thinking about positioning for recovery instead of reacting emotionally to short term weakness.

The ongoing sell off has already forced significant portfolio shifts across the market. Trend Research, led by Liquid Capital founder Jack Yi, recently exited what had been Asia’s largest leveraged Ethereum position. The firm had built approximately 2.1 billion dollars in ETH exposure but ultimately closed the trade at a realized loss of about 869 million dollars. Notably, Yi had reiterated his bullish long term outlook only days before the final unwind.

Despite high profile capitulations and Ethereum’s difficulty reclaiming key psychological levels, Lee maintains that the asset’s historical behavior points toward another sharp rebound once selling pressure exhausts itself.

Binance, the world’s largest cryptocurrency exchange, has pushed back against circulating rumors suggesting the platform faced unprecedented withdrawals in recent days. Social media posts claimed that between 10 and 17 billion dollars had exited the exchange, warning users of potential insolvency and urging immediate withdrawals. Some widely followed analysts on X amplified these claims, causing concern across the crypto community.

The exchange responded swiftly, stating that the numbers cited came from third-party sources and contained discrepancies. Binance highlighted that platforms such as Coinglass and DefiLlama had reported inconsistent data, which will take 24 to 48 hours to fully correct. They emphasized that users should not panic based on inaccurate reports and reassured the public that their systems remain healthy.

Binance also explained that routine withdrawal tests on all trading platforms are standard and healthy procedures. They advised users to carefully verify wallet addresses before transferring funds and even proposed creating an annual “withdrawal day” for all exchanges to confirm the authenticity of their holdings.

Supporting its stance, Binance pointed to the latest Proof-of-Reserves report on its official website, showing that all cryptocurrencies held by the platform are overcollateralized. This means the USD backing exceeds the total crypto reserves, signaling financial stability and robust liquidity. Binance insisted that despite the recent social media panic, the exchange remains fully operational and well-capitalized, urging the community to focus on verified data rather than rumors.