Crypto Chaos: Fear, Flash Crashes, and Follies Since FTX

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My Dearest Highlights

  • The utterly delightful Bybit and Block Scholes report informs us that Bitcoin’s February 5 flash crash has unleashed a torrent of derivatives drama not seen since the glorious FTX collapse of 2022.
  • During this spectacle, ETH plummeted below $2,000, SOL flirted with $70 (a staggering 70% dive from January’s heights), and other darlings like XRP and BNB took a 60% nosedive from their peaks. How utterly charming.
  • The market, my dear, remains in a state of “extreme fear,” blissfully decoupled from macro events, making a rebound for major tokens as likely as a Coward revival in a tax office.

The cryptocurrency market, that tempestuous tart, has been in a flutter of volatility these past months. The broader crypto scene has shed over $1.2 trillion in market capitalization, with short-dated implied volatility soaring and a mad dash for downside protection across major tokens. How utterly exhausting.

A recent tete-a-tete between Bybit and Block Scholes reveals that BTC’s brief dip to $60,000 on February 5, followed by a swift recovery above $70,000 by Friday, has sent derivatives markets into a delightful tizzy.

Bybit, the second-largest darling of the crypto exchange world, chirps that BTC’s flash crash to $60,000 last week triggered the most extreme derivatives positioning since the November 2022 FTX fiasco. How positively nostalgic.

Following Bitcoin’s little stumble, altcoins joined the melodrama, with ETH slipping below $2,000 and SOL dropping to a mere $70, down more than 70% from January’s glory days. Meanwhile, ETH, XRP, and BNB have all taken a 60% tumble from their peaks. What a performance!

Extreme derivatives positioning since 2022

The February 5 market crash briefly pushed Bitcoin to $60,000, unleashing the most extreme derivatives positioning since the November 2022 FTX debacle. Short-dated implied volatility for BTC and ETH soared to multi-year highs, matching levels last seen during that historic farce as traders scrambled for downside protection. How utterly predictable.

Bybit notes that at-the-money implied volatility spiked dramatically, with BTC’s 7-day readings surpassing 100%, reflecting intense fear and absurdly high premiums for put options. ETH options followed suit, reaching their most elevated short-dated volatility since the 2022 bear market. While not as hysterical as 2022, the dip below $60,000 for BTC and sub-$1,800 for ETH was enough to send hedging costs through the roof. How delightful.

Furthermore, funding rates across most large-cap altcoins turned deeply negative, signaling a strong bearish sentiment among perpetual shorts, most notably SOL’s 7-day average dropping to -0.04%, its lowest since October 2025. How quaint.

Though Bitcoin’s funding rates remained relatively calm, indicating the selloff was driven mainly by spot liquidations rather than leveraged futures. How utterly mundane.

Bitcoin dominance remains stable

Unlike previous market tantrums, BTC dominance has remained steadfast throughout the drawdown. Capital appears to have fled the broader crypto market proportionally rather than seeking refuge in BTC. How utterly undramatic.

However, altcoin dominance has continued its decline from approximately 36% in October to around 30%, highlighting a widespread risk-off sentiment across the crypto sector rather than a flight to quality within digital assets. How dreadfully dull.

“Cryptos have largely ignored macro events, as sentiment gauges wallow in ‘extreme fear’,” quipped Han Tan, Chief market analyst at Bybit Learn. “With crypto derivatives displaying their most extreme positioning since 2022, it’s a gargantuan ask for major tokens to stage a sustained near-term rebound in this present environment.” How utterly Coward-esque.

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2026-02-13 17:08