Bybit and analytics firm Block Scholes have released a report indicating that cryptocurrency derivatives markets have reached their most extreme positioning since the collapse of FTX in November 2022. The findings were triggered by Bitcoin's flash crash to $60,000 on February 5, 2026, which was followed by a rapid recovery above $70,000 the next day. As of February 13, BTC was struggling to hold the $66,000 level.
The report highlights several key metrics signaling severe market stress. Short-dated implied volatility for both Bitcoin (BTC) and Ethereum (ETH) surged to levels last seen during the FTX debacle, with 7-day BTC volatility exceeding 100%. This spike reflects multi-year highs in demand for downside protection among traders.
Bitcoin has experienced a 50% drawdown from its all-time high set in October 2025, leading to proportional capital outflows across the broader crypto market. Notably, Bitcoin's market dominance has remained stable during this downturn, failing to act as a relative safe haven as it has in past cycles. This suggests capital is exiting the crypto sector entirely rather than rotating into BTC.
The bearish sentiment is widespread. Funding rates for major altcoins turned decisively negative, with Solana's (SOL) 7-day average funding rate falling to -0.04%, its lowest since a major liquidation event on October 10, 2025. This indicates short traders are paying premiums to maintain bearish positions. Altcoins have borne the brunt of the sell-off: ETH fell below $2,000, SOL dropped more than 70% from recent highs, and other large-cap tokens like XRP and BNB are all down over 60% from their peaks.
Altcoin dominance has continued to decline from approximately 36% in October 2025 to around 30%, underscoring a broad, risk-off sentiment across digital assets. "Cryptos have largely shrugged off macro events, as sentiment gauges continue to wallow in 'extreme fear'," said Han Tan, Chief Market Analyst at Bybit Learn. He added, "With crypto derivatives recently displaying its most extreme positioning since 2022, it's likely a gargantuan ask for major tokens to stage a sustained near-term rebound in this present environment."
