Key Points
- During the recent market crash, Bitcoin remained steady while altcoins experienced heavy liquidations, according to a survey.
- Bitcoin options market did not experience a major liquidation event, while Ethereum’s options market saw a sharp spike in short-term volatility.
A recent surge in volatility resulted in significant losses in the cryptocurrency market, wiping out billions in open interest. Bitcoin, however, demonstrated resilience amidst the turmoil, while altcoins suffered the brunt of the impact.
Bitcoin Weathered the Storm
Bybit and Block Scholes reported that Bitcoin’s performance was relatively stable compared to the wider crypto market. They also noted that Bitcoin’s perpetual swaps performed well. On the other hand, Ethereum’s options market saw a significant spike in short-term volatility, reaching over 140% – the highest in more than three months.
The liquidations were severe. Bybit’s CEO, Ben Zhou, estimated that the actual value of liquidated positions could have ranged from $8 billion to $10 billion. More than $3.1 billion in open interest disappeared from Bitcoin, Ethereum, XRP, and Solana’s perpetual swaps after a late-Friday high.
Funding Rates and Trading Volume
The funding rates mirrored the bearish shift in the market. Altcoins experienced deeper negative funding rates in the days following the crash, while Bitcoin remained relatively stable. Open interest levels fell across major tokens, except for Bitcoin’s options market. Unlike perpetuals, Bitcoin options did not undergo a significant liquidation event, and its term structure inversion quickly corrected, according to Bybit.
Despite the market turbulence, trading volume increased significantly. Over $31.1 billion in perpetual swaps were traded on February 2, marking the highest daily volume in over a month. For Bitcoin, short-term options volatility eased after an early-week spike, indicating a potential return to stability.