Good morning Asia. This is what is making news in the markets:
Welcome to Asia Morning Briefing, a daily summary of top news during US time and an overview of market movements and analysis. For a detailed overview of the US markets, see CoinDesk’s Crypto Daybook Americas.
Bitcoin’s latest crash exposed a familiar pattern in crypto markets: Probability indicators dropped as derivatives traders scrambled to protect themselves. As options open interest in $75,000 puts surged and hundreds of millions in long bets were liquidated, prediction markets recorded only a slow erosion of bullish conviction.
Throughout January, Polymarket contracts tied to higher bitcoin price targets gradually eased through late January, but never involved the kind of abrupt volatility that ultimately wiped out hundreds of millions of dollars in leveraged long positions in a single day.
The error is rooted more in structure than in supervision. Prediction markets are built around end states. A contract that asks whether Bitcoin will end the month above a certain level does not reward traders for correctly anticipating a two-day leverage increase if they still believe a bounce is possible before expiration. The reward depends on the final destination, not the speed or violence of the path. In that setup, short-term volatility can be rationally ignored.
Research from Galaxy Digital has argued that directional prediction markets inherently compress complex beliefs into binary outcomes, often exaggerating consensus and obscuring magnitude and tail risk.
Derivatives desks operate with opposite incentives. Deribit data showed that open interest in $75,000 puts increased rapidly, as CoinDesk previously reported, nearly matching the once-dominant $100,000 call strike in a matter of days.
That change did not necessarily indicate a long-term bearish turn. It reflected traders buying insurance as bearish distributions widened and volatility expectations increased. 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 forced closed in 24 hours (a weekend when liquidity was tight and TradFi traders were not at their desks), with most of the selling concentrated in perpetual futures venues where margin dynamics accelerate moves.
For a leveraged fund, this is an urgent development. For a month-end probability contract, it is decisive only if the belief about the final outcome changes.
In its 2025 year-end review, research firm QCP described cryptocurrencies as operating at two speeds, where structural optimism coexists with sudden drops driven by leverage.
Bitcoin did not fall below $75,000, but it also did not recover to the levels that markets suggested were likely. The end result split the difference and, in doing so, revealed how different these markets are in measuring the same underlying risk.
Market movement
BTC: Bitcoin traded just under $80,000 after a week of strong volatility that wiped out leveraged long positions and pushed traders toward downside protection rather than new upside bets.
ETH: Ether hovered around $2,300, extending its multi-week slide as risk appetite remained muted and traders showed little urgency to pivot back into large-cap altcoins.
Gold: Gold was trading around $4,750 an ounce, pulling back sharply after testing the $5,300 level earlier in the week.
Nikkei 225: Japan’s Nikkei 225 rose slightly on Monday as Asia Pacific markets traded mixed, with investors weighing private data showing China’s factory activity in January expanded at its fastest pace since October, while stocks in South Korea and Hong Kong fell and gold extended recent losses.
Elsewhere in Crypto
- Cryptocurrency Exchanges Sanctioned Along with Iranian Officials in Trump Administration’s Iran Crackdown (The Block)
- Quantum threat becomes real: Ethereum Foundation prioritizes security with leanVM and PQ signatures (CoinDesk)
