Matrixport: Crypto Market Approaching Critical Level, Liquidity Continues to Outflow, Volatility Reset

PANews February 20 News, Matrixport released a research report on the X platform, noting that Bitcoin recently experienced a rapid decline, with implied volatility of options soaring at one point and then partially retreating. Bitcoin’s price dropped from around $85,000 to a low near $60,000, then stabilized around $66,000. Meanwhile, the implied volatility expiring in March 2026 surged from just over 40% to nearly 65%, reflecting a strong demand for downside protection during the decline. Subsequently, implied volatility fell back to around 50%, indicating that some tail risk hedges are being unwound and short-term pressure has eased.
The crypto market is approaching a critical inflection point: volatility remains high, sentiment hovers at extreme lows, and market liquidity continues to flow out. Traders are gradually unwinding crash hedges, overall positions have significantly lightened, and participation has markedly decreased. Historically, such a combination of features often appears before the start of an important directional move. The macro environment has improved, but crypto asset prices have not yet clearly followed suit, and this divergence is usually difficult to sustain over the long term.