Good morning, Asia. Here’s what’s making news in the markets:
Welcome to the Asia Morning Briefing, a daily overview of top stories in US hours and an overview of market movements and analysis. For a detailed overview of US markets, see CoinDesk’s Crypto Diary Americas.
Bitcoin’s recent slide revealed a familiar pattern in crypto markets: probability gauges drifted lower as derivatives traders sought protection. As options open interest in $75,000 puts rose and hundreds of millions in long bets were liquidated, the prediction markets registered only a slow erosion of conviction.
During January, Polymarket contracts tied to higher bitcoin price targets gradually softened through late January, but they never hinted at the kind of sudden volatility that ultimately wiped out hundreds of millions of dollars in leveraged long positions in a single day.
The lack is 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 leveraged flush if they still believe a rebound is possible before expiration. The payoff 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 overestimating consensus and hiding magnitude and tail risk.
Derivatives desks operate under the opposite incentives. Data from Deribit showed open interest in $75,000 put options growing rapidly, as CoinDesk previously reported, nearly matching the once-dominant $100,000 call strike within days.
That shift did not necessarily signal a long-term bearish turn. That reflected traders buying insurance as downside spreads widened and volatility expectations jumped. Options markets are forced to react early because capital is immediately exposed to tail risk.
Liquidation data explains why the divergence became visible so quickly. More than $500 million in leveraged long positions were forced out in 24 hours — a weekend when liquidity was thin and TradFi traders weren’t at their desks — with the bulk of the selling concentrated in perpetual futures venues, where margin dynamics accelerate moves.
For a leveraged fund, it is an urgent event. For a probability contract at the end of the month, it is decisive only if it changes the belief in the final outcome.
In its 2025 year-end report, research firm QCP has described crypto as operating at two speeds, where structural optimism coexists with sudden leverage-driven drawdowns.
Bitcoin didn’t crash below $75,000, but it also didn’t come back to the levels that the prediction markets suggested were likely. The final result split the difference, thus revealing how differently these markets measure the same underlying risk.
Market movement
BTC: Bitcoin traded just below $80,000 after a week of sharp volatility that removed leveraged long positions and pushed traders toward downside protection rather than fresh upside bets.
ETH: Ether hovered near $2,300, extending its multi-week slide as risk appetite remained muted and traders showed little urgency to rotate back to 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 on Monday as Asia-Pacific markets traded mixed, with investors weighing private data showing that China’s factory activity in January expanded at the fastest pace since October, while shares in South Korea and Hong Kong fell and gold extended recent losses.
Elsewhere in Crypto
- Crypto exchanges sanctioned along with Iranian officials in Trump administration’s Iran crackdown (The Block)
- The quantum threat becomes real: Ethereum Foundation prioritizes security with leanVM and PQ signatures (CoinDesk)
