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Welcome to Asia Morning Briefing, a daily summary of the top news stories during U.S. business hours and insight into market movements and analysis. For a detailed overview of US markets, see Crypto Daybook Americas from CoinDesk.
Bitcoin’s latest slide revealed a familiar pattern in crypto markets: Probability gauges fell as derivatives traders scrambled to protect themselves. As open interest on $75,000 puts surged and hundreds of millions of long bets were liquidated, prediction markets saw only a slow erosion of bullish conviction.
Throughout January, Polymarket contracts tied to higher bitcoin price targets gradually eased until late January, but they never involved the kind of brutal volatility that ultimately wiped out hundreds of millions of dollars of leveraged long positions in a single day.
The failure has more to do with structure than oversight. Prediction markets are built around end states. A contract asking whether Bitcoin will end the month above a certain level does not reward traders who correctly anticipated two-day leverage if they still believe a rebound is possible before expiration. The payoff depends on the final destination, not the speed or violence of the path. In this configuration, short-term volatility can be rationally ignored.
Galaxy Digital’s research has shown that directional prediction markets inherently compress complex beliefs into binary outcomes, often exaggerating consensus and obscuring magnitude and tail risk.
Derivatives desks operate under opposing incentives. Data from Deribit showed that open interest in the $75,000 puts was growing rapidly, as CoinDesk previously reported, nearly matching the once-dominant $100,000 call within days.
This change does not necessarily signal a long-term bearish shift. This reflects the fact that traders bought insurance as downside distributions widened and volatility expectations surged. Options markets are forced to react early because capital is immediately exposed to tail risk.
The liquidation data explains why the divergence became visible so quickly. More than $500 million in leveraged long positions were forcibly closed in 24 hours – a weekend when liquidity was low and TradFi traders were away from their desks – with the bulk of selling concentrated on perpetual futures platforms where margin dynamics accelerate moves.
For a leveraged fund, this is a time-sensitive event. For an end-of-month probability contract, it is only decisive if it changes the belief about the final outcome.
In its 2025 year-end review, research firm QCP described crypto as operating at two speeds, where structural optimism coexists with sudden drawdowns due to leverage.
Bitcoin did not collapse below $75,000, but it also did not regain the levels that markets predicted were likely. The end result split the difference and, in doing so, revealed how differently these markets measure the same underlying risk.
Market movement
BTC: Bitcoin traded just under $80,000 after a week of high volatility that emptied leveraged long positions and pushed traders toward downside protection rather than new upside bets.
ETFs: Ether hovered near $2,300, extending its multi-week decline as risk appetite remained muted and traders showed little urgency to return to large-cap altcoins.
Gold: Gold traded around $4,750 an ounce, falling sharply after testing the $5,300 level earlier in the week.
Nikkei 225: Japan’s Nikkei 225 index edged higher Monday as markets across the Asia-Pacific region moved mixed, with investors weighing private data showing China’s industrial activity in January rose at its fastest pace since October, while South Korean and Hong Kong stocks fell and gold extended recent losses.
Elsewhere in crypto
- Crypto Exchanges Sanctioned Alongside Iranian Officials in Trump Administration’s Iran Crackdown (The Block)
- Quantum threat becomes real: Ethereum Foundation prioritizes security with LeanVM and PQ signatures (CoinDesk)
