The crypto market has turned somber, with major cryptocurrencies such as bitcoin (BTC), ether (ETH), solana (SOL), Binance coin (BNB) and chainlink (LINK) trading as much as 3% lower, amid frustration over the slow progress on the creation of a U.S. strategic BTC reserve and signs of dollar liquidity tightening.
Geo Chen, a macro trader and author of the popular Substack-based newsletter Fidenza Macro, suggested the market has been held up by hopes Trump would step in and “buy everybody’s bags,” but that’s unlikely to materialize soon. Consequently, the market is vulnerable to risk aversion driven by ongoing tariff discussions.
“Crypto will not be spared in the ensuing risk-off volatility, and I expect many coins to draw down 50% or more from their January highs. I have limit orders to buy some of my favorite coins like SOL at lower than half price,” Chen wrote.
Speaking of SOL, Amberdata’s options block flow tracker revealed a sizable bear put spread involving a long position in the $200 put and a short position in the $120 put, both expiring on Feb 28. This strategy bets on a decline to at least $120 by month-end, reflecting an increasingly pessimistic outlook.
Sentiment remains bearish for ether, too. ETH has already fallen 15% this month and reached its lowest in four years against bitcoin. Joe McCann, founder and CEO of Asymmetric, pointed out that “Ethereum’s fundamental positioning has weakened. Solana’s ecosystem is expanding rapidly, offering higher throughput and stronger performance, making Ethereum’s historical valuation premium harder to justify.”
Ethereum’s layer-2 scaling solutions — Optimism, Arbitrum, and Polygon — are all down over 50% this year, he noted. “This signals broader struggles, as L2s were supposed to drive ETH adoption and usage, yet they’re failing to generate sustained momentum.”
On the macro front, investors are pivoting toward gold and U.S. Treasury notes amid the threat of a potential trade war, pushing gold to a new high of $2,877 per ounce, an impressive 10% gain for the year. Historically, a heightened preference for gold has not favored bitcoin.
As if that weren’t enough, rising yields on the 10-year Japanese government bond have hit their highest levels since April 2011. Additionally, the U.S. ADP employment report due today could inject further volatility into the market. It’s a time to stay alert!
