On February 6, in the East 8 Time Zone, the cryptocurrency market experienced a typical "roller coaster" trend within 24 hours: mainstream coins saw a maximum intraday drop of over 15%, followed by a rapid rebound, with prices returning to key ranges. At this time, BTC fluctuated around $64,000-$64,005, with a 24-hour drop of about 12.3%-12.4%; ETH returned to around $1,900-$1,902, with an intraday drop of about 11.59%-11.98%. This round of sharp declines and rebounds is seen as a rare large-scale correction since the FTX incident, coinciding with the general pressure on global risk assets within the same trading day. On one side, there is the shadow of short-term panic selling and a chain of deleveraging, while on the other, Wall Street institutions, including JPMorgan, continue to raise their long-term target price for Bitcoin. The market is engaged in a new round of speculation around whether this is a panic exit or a medium to long-term allocation opportunity.
The Real Impact of the Drop from $64,000
● Path and Magnitude: Looking back from recent highs, Bitcoin experienced a rapid drop after reaching a peak, with an intraday maximum drop exceeding 15%, before being lifted by funds from the lows, currently consolidating around $64,000. For short-term investors who chased the highs, this means a paper loss in the range of several percentage points, with the short-term price path showing a typical deleveraging curve of "sharp rise—sharp drop—weak recovery," heightening traders' concerns about the top formation.
● ETH and Mainstream Asset Correlation: With ETH currently around $1,900 and a 24-hour drop of about 12%, this round of movement is not an isolated asset anomaly but rather a sign that mainstream crypto assets have entered a high volatility range. Compared to BTC's daily drop of about 12.3%-12.4%, ETH's magnitude is highly synchronized, indicating that funds in this round of correction did not significantly differentiate between "digital gold" and the leading smart contract assets, but rather viewed them as part of the same basket of risk assets for unified reduction.
● Comparison with Previous Major Drops Post-FTX: In terms of drop magnitude and duration, this correction has already ranked among the largest since the FTX incident, but its duration leans more towards a "flash crash + rapid rebound" structure, rather than the previous prolonged declines lasting several days or even weeks. This indicates that the price has undergone a significant risk repricing in a short time, but whether it has completed a sufficient turnover of chips remains to be verified by subsequent trading volumes and volatility.
● Global Risk Asset Deleveraging: Within the same time frame, U.S. stocks and precious metals also experienced varying degrees of correction, indicating that funds are contracting risk asset exposure on a larger scale. This round of Bitcoin's plunge is not an isolated black swan but is part of a global "deleveraging" chain, with funds tending to simultaneously reduce high-beta varieties and the high-volatility portions of safe-haven assets, pulling liquidity back in anticipation of further macro uncertainties.
Data Fog in a Fragmented Market
● Sources of Quotation Discrepancies: Regarding this market movement, Golden Finance and Deep Tide TechFlow reported slight discrepancies of 0.1-0.4 percentage points in the 24-hour drop data for BTC and ETH, for example, BTC's drop range recorded as 12.3%-12.4% and ETH as 11.59%-11.98%. These discrepancies mainly stem from different statistical time points chosen by each source, varying reference exchange combinations, and weighting methods, essentially reflecting the reality that the crypto market still lacks a unified "official quotation."
● Amplified Divergence Between Spot and Contracts: In extreme market conditions, some contract platforms may experience significant "spike" events due to leverage liquidations and sudden withdrawals of liquidity, causing prices to deviate from mainstream spot indices for a short time; spot platforms may also experience price differences due to insufficient depth and matching delays. This brief but intense divergence not only amplifies users' subjective perception of the "plunge magnitude" but can also further push prices away from the basic transaction concentration area through automated trading and liquidation mechanisms.
● Cognitive Bias from Data Fragmentation: Ordinary investors often see exaggerated headlines like "15% drop in 24 hours+" and extreme momentary price screenshots from different media, making it easy to misjudge the real drop magnitude and transaction structure. The diversification of data sources increases transparency but also makes differences in statistical criteria and time window selection important variables affecting sentiment, causing the same market movement to appear drastically different in the eyes of different people.
● Reference Benchmarks During Extreme Volatility: In severe volatility windows like February 6, a more prudent approach is to prioritize the weighted spot index prices and total transaction volumes from leading spot exchanges as the main anchor; contract prices and "extreme low/high points" from a single small exchange should only serve as supplementary information. Additionally, attention should be paid to transaction volume and volatility changes across multiple time frames, such as 1 hour and 4 hours, rather than being swayed by a single extreme candlestick or a one-sided percentage description.
A Market Flooded with Blood and Panic Mechanisms
● Collapse of Emotion and Depth: Trader Eugene's remark, "Buy when blood is flowing, even if it's your own blood," was widely shared on February 6 to describe the extreme panic scene that appeared in the market. The depth of orders on the order book significantly thinned during the sharp drop, with buy orders retreating layer by layer, while sell orders were aggressively pushed into weak order zones at market prices, amplifying the impact of each sell order on prices and creating a visual and psychological pressure of "blood flowing."
● Chain Liquidations and Passive Selling Dynamics: From the simultaneous amplification of price and transaction volume, it can be inferred that leveraged long positions likely triggered chain liquidations during this round of extreme volatility. Once the liquidation line is reached, the system will sell the underlying asset at market prices to recover margin. Although there is a lack of reliable specific liquidation scale data, the continuous amplification of transactions during the one-sided downward phase is a typical characteristic of passive selling combined with active stop-loss, creating "waterfall" pressure on short-term prices.
● Boundaries of Emotional Characterization: Since the specific values of emotional indicators like the Fear and Greed Index were not provided in the briefing and fabricating them is explicitly prohibited, this analysis is based solely on confirmed price and transaction facts to characterize the level of panic, without using any unverified emotional indices. In other words, what we see is the rational outcome behind the surge in volatility and transaction volume, rather than an attempt to amplify the market's drama with unverified emotional labels.
● Withdrawal Effects of Market Makers and High-Frequency Funds: In a systemic decline, some market makers and high-frequency funds may actively reduce their quoting scale and widen bid-ask spreads for risk control reasons, or even temporarily withdraw orders to observe during extreme phases. A sudden reduction in depth means that the same scale of sell orders will be "absorbed" at a greater price level, thereby amplifying retail investors' panic experience at the order book level and forcing passive funds to transact at worse prices, creating a negative feedback loop of "price decline—depth deterioration—panic intensification."
Wall Street's Timing Mismatch with Bitcoin
● Volatility and Gold Ratio Signals: JPMorgan's latest report indicates that the volatility of Bitcoin relative to gold has dropped to a historical low of 1.5, meaning that Bitcoin's price volatility is significantly converging compared to traditional safe-haven assets. For long-term allocation funds, this downward trend in the indicator suggests that Bitcoin is gradually transitioning from a high-leverage speculative asset to an alternative asset that can be included in macro asset allocation frameworks.
● From Speculative Target to Macro Asset: The convergence of volatility does not mean that short-term volatility will cease, but rather that over a longer cycle, price behavior is becoming more closely linked to macro variables and institutional position management. For asset management institutions, when Bitcoin's risk characteristics can be more quantifiably hedged and managed in portfolios, it may transform from "the battlefield of a few aggressive funds" into an asset that coexists with gold and stocks in some portfolios, shifting the nature of funds from short-term hot money to longer-term allocation funds.
● Implicit Assumptions Behind the $266,000 Target Price: JPMorgan's $266,000 long-term target price is based on the assumption that Bitcoin's total market capitalization will align with the allocation ratios of traditional safe-haven assets and some risk assets. To reach this price range, significant new funds need to continuously flow in, raising Bitcoin's total market capitalization to a level comparable to gold and certain stock indices. This process relies on the expansion of compliant products like ETFs and structural changes in how more institutions allocate Bitcoin weight in their asset configurations.
● Discrepancy Between Plunge and Long-Term Optimism: On the very day of February 6, the market presented retail investors with a flash crash of 15%, bloodshed, and chain selling, while institutional research reports focused on the price and market cap space over the next few years or even longer. This mismatch in time scales makes it easier for short-term participants to become emotional in the face of extreme volatility—on one side is the instant drawdown of account net value, while on the other is the "long-term upside potential" mentioned by institutions. The tension between the two is at the core of this round of market debate.
Bitwise Bets on UNI and Institutional Depth
● First Applicant for UNI Spot ETF: During the same time window of the market's sharp correction, Bitwise officially submitted a UNI spot ETF application to regulators, becoming the first institution to advance a spot ETF for this asset. This means that after the Bitcoin spot ETF, institutions are beginning to attempt to include the leading decentralized exchange token UNI into the traditional financial product shelf system, expanding the types of crypto assets available for compliant funds.
● Signal Meaning of Counter-Trend Submission: Choosing to submit the UNI spot ETF application on the day of a sharp correction not only expresses optimism about a single asset but also reflects a bullish stance on the long-term development space of the entire DeFi sector. On one hand, this conveys Bitwise's intention to position itself in new categories at low costs during market downturns; on the other hand, it indicates a strong expectation of marginal improvements in the regulatory environment, showing that they will not delay the expansion of their product line due to short-term price fluctuations.
● Impact on Valuation and Pricing if Approved: If the UNI spot ETF is approved, UNI, as the leading DEX token, will have its valuation anchor not only derived from on-chain trading volume and fee income expectations but will also include passive fund demand generated from ETF share subscriptions and redemptions. For the entire DeFi sector, the valuation and pricing methods may also change, expanding from "on-chain internal circulation" dynamics to a dual-driven framework of "on-chain fundamentals + offline passive fund allocation."
● Contrast with the Bitcoin ETF Wave: Looking back at the previous process of launching the Bitcoin spot ETF, it can be seen that institutionalization is a gradual path extending from single assets to multiple assets. The Bitcoin spot ETF opened the door for mainstream compliant funds to enter the crypto market, while the ETF exploration of leading assets in segmented tracks like UNI represents a deepening of institutionalization, shifting from "whether to allocate Bitcoin" to "how to make structural allocations within crypto assets."
After the Plunge, Is It a Pit or a Step?
● Framework for Judging the Nature of the Correction: Considering the maximum intraday drop of over 15%, the approximately 12% 24-hour retracement of BTC and ETH, and the simultaneous pressure on U.S. stocks and precious metals, this round of volatility can be preliminarily classified as a typical moment of global risk asset deleveraging, rather than a single negative factor in the crypto industry. Meanwhile, the volatility structure improvement and the $266,000 long-term target price provided by institutions like JPMorgan offer a macro and funding support framework for medium to long-term bulls.
● Phase Bottom Still to Be Verified: Although a rapid technical rebound occurred after the plunge, it cannot yet be confirmed that the market has formed a phase bottom, and this judgment is explicitly marked as to be verified in the briefing. Considering the uncertainties in macro liquidity and regulatory pace, simply characterizing this round of decline as an "excellent bottom-fishing opportunity" carries significant risks. A more reasonable approach is to view it as an important price reassessment node, continuously observing the evolution of transactions, volatility, and fund flows in the following trading weeks.
● Data-Driven Risk Control and Positioning Suggestions: During periods of elevated volatility, it is more suitable to adopt a gradual positioning approach rather than a one-time heavy investment, utilizing the back-and-forth fluctuations within price ranges to optimize holding costs. At the same time, it is essential to focus on changes in hard data such as trading volume, implied and historical volatility, rather than being swayed by unverified emotional indicators and social media sentiment. For accounts that are already highly leveraged, it is necessary to prioritize reducing leverage and increasing safety margins to avoid being passively exited during the next round of extreme volatility.
● Key Variables for Mid-Term Trends: Looking ahead, ETF progress and macro liquidity will continue to jointly shape the mid-term trajectory of Bitcoin and mainstream coins. On one hand, the expansion of product lines, including Bitcoin and potential UNI spot ETFs, will determine how quickly and in what structure compliant funds can enter the market; on the other hand, changes in global interest rate paths, economic growth expectations, and risk preferences will transmit through funding costs and risk premiums to the valuation of crypto assets. For investors, after significant price fluctuations, it is more important to find the time periods and risk ranges they are willing to bet on within these two main lines.
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