Hyperliquid – Record daily revenue of $6.84M, but HYPE hits the brakes

Crypto Liquid Funds Reassess Risk After Bitcoin’s Sharp Crash

Bitcoin's sharp decline of over 20% last week caught crypto liquid funds off guard, primarily due to rapid sentiment shifts and heavy spot sales rather than a single event. Fund managers noted that the selloff revealed persistent structural weaknesses, with contagion spreading from unwinding crowded trades. Many describe the current state as a "rolling bear market" in altcoins, which have been under pressure since late 2024. Performance varies significantly among funds, with concentrated portfolios of liquid, revenue-generating assets recovering faster. Multi-strategy funds are generating alpha through relative value trades and volatility arbitrage, while leveraged altcoin funds faced the most significant challenges. Most managers see little chance of a broad altcoin rally soon, instead focusing on sector-specific opportunities driven by fundamentals. There is growing concern that crypto is losing its edge to AI and tech innovations, though skilled managers continue to find opportunities in consolidation and strategic shifts.

TheNewsCrypto13 min fa

Can IBIT Really Trigger a Market-Wide Liquidation?

Market discussions have recently focused on the sharp Bitcoin decline and subsequent rebound in early February, with attention turning to the role of BlackRock’s iShares Bitcoin Trust (IBIT). Jeff Park, an advisor at Bitwise, suggests the volatility was closely tied to IBIT’s record-high trading volume and put-heavy options activity on February 5. Contrary to expectations, IBIT saw net creation—not redemption—amid the sell-off, indicating the drop may not have been driven by ETF investor panic. Instead, the pressure likely originated from institutional deleveraging and risk reduction within traditional finance structures. Market makers and multi-asset portfolios adjusted derivatives and hedging positions, transmitting stress through IBIT’s secondary market and options activity, ultimately affecting Bitcoin's price. A common narrative attributes sell-offs to ETF redemptions forcing BTC liquidations. However, only authorized participants (APs) can create or redeem shares. Secondary market trading—no matter how large—only changes share ownership, not the underlying BTC held in custody. On the day of the drop, net BTC outflows from all U.S. spot Bitcoin ETFs amounted to only 5,952 BTC, a small fraction of total holdings. When IBIT sells off in the secondary market, APs may arbitrage discounts by buying shares and hedging with BTC spot sales or futures shorts. This hedging can transmit selling pressure to Bitcoin markets even without significant net redemptions. Thus, IBIT’s influence operates through complex, layered mechanisms rather than direct BTC liquidation.

marsbit19 min fa

No Need to Wait for Monday's Open: Hyperliquid's HIP-3 Is Becoming a Pricing Reference for CME

Based on a detailed analysis of Hyperliquid's HIP-3 silver perpetual contract during a period of extreme market volatility, this report compares its performance against the CME/COMEX benchmark. Key findings indicate that for retail-sized orders, Hyperliquid offered competitive spreads (median 2.4 bps vs. COMEX's 3 bps) and execution quality pre-crash. However, the platform exhibited thinner order book depth and higher tail execution risk during the sell-off, with some trades deviating over 50 bps from the mid-price. A significant advantage emerged during weekends when CME is closed: Hyperliquid provided continuous 24/7 trading, processing $257 million in notional volume with compressed spreads (median 0.93 bps). This continuous price discovery mechanism effectively priced the Sunday reopening auction, with its final price closer to CME's open than Friday's close. While weekend liquidity is structurally lower, the platform demonstrates a unique use case for pre-open hedging and price discovery. The report concludes that HIP-3 is effective for retail and mid-sized flows but remains capacity-constrained for large institutional orders compared to traditional futures venues.

marsbit25 min fa

Bitcoin enters a reset phase: Whales sell as BTC leverage gets flushed

ambcrypto56 min fa

Why This Bitcoin Bear Market Is Among The Worst Ever: CryptoQuant Researcher

A CryptoQuant researcher, Julio Moreno, indicates the current Bitcoin bear market is one of the worst in recent history based on the 365-day simple moving average (SMA). Bitcoin's price is currently 30% below this key metric, a deeper decline than in the 2014 and 2018 bear markets at a similar stage, though not as severe as the 60% drop witnessed in 2022. This highlights the asset's continued high volatility. For a market turnaround, improved demand is necessary, but capital outflows from US Bitcoin ETFs signal ongoing challenges. Despite a recent 2% rise, Bitcoin's price remains around $70,500, nearly 45% below its all-time high.

bitcoinist57 min fa