The global cryptocurrency market shed nearly $300 billion in total market capitalization over the weekend, amid a broader market crash. This multi-billion-dollar vanish has triggered fresh debate over whether the downturn signals deeper structural problems in digital assets. 

However, Raoul Pal, founder and CEO of Global Macro Investor (GMI), argues the sell-off has little to do with crypto fundamentals and more to do with a temporary shortage of U.S. dollar liquidity. 

In a post shared on X on Sunday, Pal pushed back against what he described as a growing narrative that “Bitcoin and crypto are broken” and that the market cycle has ended. 

https://t.co/M5mLAi3XLA

— Raoul Pal (@RaoulGMI) February 1, 2026

According to Pal, recent price action points to a broader macro-driven issue rather than a sector-specific failure. 

Bitcoin and SaaS stocks move together

Pal highlighted a key observation: Bitcoin and Software-as-a-Service (SaaS) stocks have been falling almost in lockstep. This is notable because the two asset classes are fundamentally different, yet both are considered “long-duration assets,” as their valuations depend heavily on future growth expectations.

“What I found destroyed both the BTC narrative and the SaaS narrative,” Pal said. “SaaS and BTC are the exact same chart.”

Bitcoin recently dropped toward the mid-$75,000 range, while several high-growth technology stocks also saw sharp declines. Pal argued that when unrelated assets fall together, it often signals a common macro driver, rather than isolated problems within each market. 

Liquidity drain, not crypto-specific stress

According to Pal, the main pressure point has been U.S. liquidity tightening, worsened by repeated government shutdowns and structural issues in the Treasury market. He pointed to the depletion of the Federal Reserve’s Reverse Repo Facility (RRP), a place where institutions park excess cash overnight, as a key factor. 

In earlier years, when the U.S. Treasury rebuilt its Treasury General Account (TGA), liquidity drains were offset by money flowing out of the RRP. That buffer is now largely gone.

“With no offset available, TGA rebuilds have become pure liquidity drains,” Pal explained.

He also said that a strong rally in gold absorbed much of the remaining marginal liquidity, leaving riskier assets like crypto and growth stocks more exposed.

Fed leadership concerns and market reaction

Some market participants have linked the crypto decline to speculation around Kevin Warsh, reportedly under consideration for a senior Federal Reserve role. Jeff Mei, chief operating officer at crypto exchange BTSE, said investors fear Warsh could maintain a tougher stance on inflation and rate cuts.

Pal rejected that view, calling it a “false narrative.” He argued that Warsh is more likely to follow a Greenspan-era approach, allowing the economy to run hot while relying on productivity gains, particularly from artificial intelligence, to manage inflation.

“Warsh will cut rates and do nothing else,” Pal said, adding that broader liquidity decisions would likely be driven through fiscal and banking channels.

Why this matters for markets

The episode highlights how macro liquidity conditions continue to dominate crypto price action, even as the industry matures. Similar liquidity-driven sell-offs occurred in 2022, when aggressive Federal Reserve tightening triggered sharp declines across both digital assets and technology stocks.

Pal believes the current liquidity headwinds are temporary and expects conditions to improve once the latest U.S. government shutdown is resolved. However, he acknowledged that timing remains uncertain and volatility may persist. “Often in these cycles, time matters more than price,” he said.

For now, the market downturn appears less about crypto’s long-term viability and more about short-term liquidity stress, reinforcing the growing link between digital assets and global macroeconomic forces.

Also Read: Japan’s Largest Wealth Manager Cuts Crypto Exposure Amid Market Turmoil

Cross-chain crypto protocol CrossCurve has confirmed that its bridge was exploited in a smart contract attack, resulting in the loss of approximately $3 million across multiple blockchain networks. 

The incident, disclosed late Sunday, once again underscores the persistent security risks surrounding cross-chain bridges, one of the most vulnerable components in decentralized finance (DeFi).

CrossCurve announced on X that its bridge was “under attack,” citing the exploitation of a vulnerability in one of the smart contracts used for cross-chain operations. The protocol immediately urged users to suspend all interactions as the team works on the breach. 

⚠️ URGENT Security Notice

Dear users,

Our bridge is currently under attack, involving the exploitation of a vulnerability in one of the smart contracts used.

Please pause all interactions with CrossCurve while the investigation is ongoing.

We appreciate your patience and… pic.twitter.com/yfo1KvWoDd

— CrossCurve (@crosscurvefi) February 1, 2026

Blockchain security analysts later confirmed that the exploit allowed attackers to bypass critical validation checks and unlock tokens without proper authorization. 

What happened and how the attack worked

According to Defimon Alerts, shared by blockchain security company Decurity, the attacker used a vulnerability that enabled anybody to spoof a cross-chain message. 

The vulnerability existed in a smart contract linked to CrossCurve’s Axelar-based receiver system. The attacker reportedly called a function called expressExecute on the ReceiverAxelar contract with a forged message.

This bypassed gateway validation and triggered token unlocks on the PortalV2 contract. As a result, assets were released without backing, allowing the attacker to drain funds across several networks.

Defimon Alerts estimated total losses at around $3 million, though the final figure may change as investigations continue. At the time of writing, CrossCurve has not released a complete breakdown of affected assets or chains.

CrossCurve @crosscurvefi (ex https://t.co/4HJ33uOZUS) has been exploited for around 3 million on several networks.

Anyone could call expressExecute on ReceiverAxelar contract with a spoofed cross-chain message, bypassing gateway validation and triggering unlock on PortalV2.… pic.twitter.com/EfYe3Tfo9v

— Defimon Alerts (@DefimonAlerts) February 1, 2026

Response from CrossCurve and Curve Finance

In an effort to recover the stolen funds, CrossCurve CEO Boris Povar publicly shared 10 wallet addresses believed to have received assets from the exploit. He offered a bounty of up to 10% if the funds are returned within 72 hours, a practice commonly referred to as a “white hat” reward.

According to Povar, in case of no contact within the given time frame, CrossCurve will consider the incident as malicious and seek legal alternatives. These include working with law enforcement, filing civil lawsuits, and coordinating with other crypto projects to freeze funds where possible.

Curve Finance that has collaborated with CrossCurve also released a statement that urged users who had invested their votes in CrossCurve pools to reevaluate their hold. The Curve team insisted on the need to be risk-conscious in making decisions when dealing with third-party protocols.

In light of the recent security incident involving https://t.co/3Wv3pEhCu8 (== CrossCurve):

Users who have allocated votes to Eywa-related pools may wish to review their positions and consider removing those votes. We continue to encourage all participants to remain vigilant and… https://t.co/chd5YBOXhr

— Curve Finance (@CurveFinance) February 1, 2026

Why this matters for the crypto industry

Cross-chain bridges have long been a major attack surface in crypto. Over the past few years, bridge exploits have accounted for billions of dollars in losses. 

High-profile incidents include the Ronin Bridge hack, the Wormhole exploit, and the Nomad bridge failure, all of which involved flaws in message verification or validation logic.

The CrossCurve incident is another case of a well-known pattern of a small error in validation code resulting in a massive loss of assets within a few days. Such incidents still bring questions to regulators, investors and developers regarding security assumptions of cross-chain systems.

Related security trends and recent attacks

The broader threat landscape is also evolving. In a recent case, cybersecurity researchers at ReversingLabs uncovered malware hidden inside Ethereum smart contracts.

The hackers exploited the Node Package Manager (NPM) with counterfeit JavaScript packages to covertly extract malicious commands out of the blockchain to enable malware to bypass the usual security checks.

Collectively, these events indicate that attackers are becoming more likely to take advantage of the trust and transparency of blockchain infrastructure itself, and not necessarily by using overtly malicious activity.

How users can stay safe

To the users, the CrossCurve exploit is yet another reminder that there is real risk to interacting with DeFi protocols. Security experts suggest not using new bridges or those with a low audit, exposure to cross-chain products, and keeping a close eye on the announcements of protocols. 

Possible losses can also be minimized by using hardware wallets, not signing blind contracts, and diversifying assets in platforms.

As investigations into the CrossCurve exploit continue, the incident reinforces a central reality of decentralized finance: innovation often moves faster than security, and users remain the final line of defense.

Also Read: Makina Finance Hacked: MEV Bot Snipes 1,299 ETH in $4M Protocol Exploit

A public disagreement has emerged between the leadership of two of the world’s largest cryptocurrency exchanges over the causes of the massive market crash that hit the crypto industry last year on October 10–11. 

Now months after the incident, OKX CEO Star Xu has openly criticized Binance’s actions which led to the crash, while Binance Co-Founder Changpeng Zhao (CZ) has firmly rejected the claims.

“On October 10, tens of billions of dollars were liquidated. As CEO of OKX, we observed clearly that the crypto market’s microstructure fundamentally changed after that day,” Xu said, emphasizing that it was Binance’s high APY USDe campaign that led to the market bloodbath. 

No complexity. No accident.
10/10 was caused by irresponsible marketing campaigns by certain companies.

On October 10, tens of billions of dollars were liquidated. As CEO of OKX, we observed clearly that the crypto market’s microstructure fundamentally changed after that day.… pic.twitter.com/N1VlY4F7rt

— Star (@star_okx) January 31, 2026

The debate centers on one of the largest liquidation events in crypto history, when roughly $19 billion in leveraged positions were wiped out in a single day, triggering sharp price swings and exposing weaknesses in market structure and risk management across major platforms.  

What triggered the market crash

In a detailed post on X, Xu explained the October 10 crash was not an accident or a complex market failure. Instead, he described it as the result of “irresponsible marketing campaigns by certain companies.”

Xu explained that Binance launched a short-term user acquisition campaign offering around 12% APY on USDe, a yield-bearing token created by Ethena. During the campaign, Binance allowed USDe to be used as collateral with the same treatment as traditional stablecoins like USDT and USDC, and without strict limits.

According to Xu, this design decision encouraged users to move large amounts of capital into USDe without fully understanding its risk profile. 

Unlike tokenized money market funds such as BlackRock’s BUIDL or Franklin Templeton’s BENJI, Xu said USDe operates more like a tokenized hedge fund product, relying on arbitrage and algorithmic trading strategies that carry higher risk.

He added that many users viewed USDe as a stablecoin equivalent, even though it embedded significantly more volatility and leverage risk.

Leverage loops and systemic risk

Xu described how risk escalated rapidly as traders began looping leverage. Users converted USDT or USDC into USDe, used USDe as collateral to borrow more USDT, converted the borrowed funds back into USDe, and repeated the cycle. 

“This leverage loop produced artificial APYs of 24%, 36%, and even 70%+, widely perceived as “low risk” simply because they were offered by a major platform,” Xu stated, “Systemic risk accumulated rapidly across the global crypto market.”

This structure created what appeared to be unusually high “low-risk” yields, sometimes exceeding 30% or even 70%, simply because they were offered by a major exchange.

When market volatility increased, USDe briefly lost its peg, triggering cascading liquidations across exchanges. Xu said weaknesses in risk controls around assets such as wrapped Ether and liquid staking tokens worsened the situation, causing some tokens to trade near zero during the panic.

He claimed the damage from the crash was, in some ways, more severe than the collapse of FTX, citing widespread losses for traders and crypto firms, including OKX customers.

CZ rejects allegations as “far-fetched”

When criticized, Changpeng Zhao has always denied claims over Binance having any involvement in causing the crash. Speaking during a question-and-answer session on Binance’s social media channels, Zhao described claims blaming Binance as “far-fetched,” according to Bloomberg. 

Zhao said Binance did not trigger the forced liquidations and emphasized that the exchange operates under regulatory oversight in Abu Dhabi, with additional monitoring arrangements involving U.S. authorities. 

He noted that regulators have the ability to review Binance’s systems and operations. Addressing platform issues during the crash, Zhao said Binance had already compensated affected users. 

The exchange reportedly paid out around $600 million, including $300 million to retail traders and $100 million reserved for institutional clients facing liquidity stress.

Zhao also warned about coordinated online campaigns spreading misinformation, claiming some attacks were driven by paid actors attempting to damage Binance’s reputation. 

Why the dispute matters for crypto markets

The dispute raises more general issues of market structure, leverage, and transparency in crypto trading. The October liquidation incident revealed the extent to which aggressive yield products and collateral policy can increase risk in volatile times.

The same issues arose during previous market crashes, such as the Terra-Luna crash in 2022 and the FTX crash later that year, which demonstrated how interconnected systems and leverage can amplify systemic shocks.

While Xu said he was not trying to attack Binance, he claimed that big platforms have a greater responsibility because they have the power to influence the actions of the market. Zhao, in his turn, insisted that Binance was responsible and adhered to the regulatory requirements.

Impact and what comes next

The controversy is expected to affect the design of yield products by exchanges, collateral regulations and marketing disclosures in the future.

The question of whether crypto platforms are neutral marketplaces or actively influence risk-taking behavior is increasingly being questioned by regulators and market participants.

With the crypto markets still expanding, the October crash is a lesson that high yields, leverage, and complex products may be associated with hidden risks. The response of exchanges can determine the investor trust and market stability in the future.

Also Read: Binance’s CZ in Talks With Governments on Tokenization

The U.S. Commodity Futures Trading Commission (CFTC) is moving forward with a broad reset of its regulatory approach to prediction markets, announcing plans to write new rules that clarify how these fast‑growing platforms will operate under federal law. 

The announcement comes from CFTC Chairman Michael Selig at a panel alongside Securities and Exchange Commission (SEC) Chair Paul Atkins, as the tension between federal regulators, states, and the courts intensifies. 

Prediction markets let users trade contracts tied to future outcomes, such as elections, economic events, and sports results. Platforms such as Polymarket, Kalshi, Coinbase, DraftKings, FanDuel, Robinhood, and others operate or plan to launch products that let people buy and sell these contracts. 

But questions about legality, jurisdiction, and consumer protections have always shadowed this sector, prompting the CFTC’s renewed regulatory effort. 

Why the regulatory pivot?

Chairman Selig emphasized that the current framework for event contracts, the legal term used by the CFTC, has created “uncertainty” rather than clarity for market participants. 

To address this, he directed staff to withdraw a 2024 proposal that would have banned political and sports-related event contracts, as well as a 2025 advisory cautioning the offering of sports‑related contracts amid legal disputes. 

Selig told the audience that the previous efforts, while well‑intended, failed to provide clear guidance and instead left operators and traders in a regulatory gray zone. 

“It is time for clear rules and a clear understanding that the CFTC supports lawful innovation in these markets,” he said, reflecting his goal to balance innovation with investor protection and market integrity. 

The new rulemaking will aim to lay out precise standards for how event contracts should be structured, vetted, and overseen, including how they relate to derivatives law and whether federal jurisdiction preempts conflicting state gaming laws. 

State vs Federal: A growing legal clash

Legal challenges have become widespread. Multiple states have argued that prediction markets’ sports‑related contracts resemble unlicensed gambling and should fall under state gaming laws, not federal oversight. 

For example, Tennessee’s Sports Wagering Council recently ordered Kalshi, Polymarket, and Crypto.com to halt sports contracts and refund customers by Jan. 31, 2026, claiming these offerings violate state law. 

BREAKING: Tennessee Sports Wagering Council sends cease-and-desist letters to Kalshi (📸), Polymarket and Crypto, demanding that they cease offering sports event contracts to TN customers immediately, void all pending contracts and issue refunds by Jan. 31. Lawsuits are imminent. pic.twitter.com/jDIPIwsrCn

— Daniel Wallach (@WALLACHLEGAL) January 9, 2026

Similar actions have been taken in Connecticut, and courts in Massachusetts have barred Kalshi from offering sports markets without state gambling licenses. 

In contrast, federal courts previously ruled that some political event contracts did not constitute illegal gaming, underscoring the debate over jurisdiction. Selig signaled that the CFTC may engage more actively in these cases. 

He directed staff to reassess how the agency participates in ongoing litigation, especially where jurisdictional questions are contested, asserting that “the Commission has the expertise and responsibility to defend its exclusive jurisdiction over commodity derivatives.” 

Growth, innovation, and scrutiny

Prediction markets are not new, they have operated under the CFTC’s jurisdiction for years. However, rapid adoption in the last few election cycles, expanding retail participation, and the integration of crypto platforms have dramatically increased their profile. 

In late 2025, Polymarket re‑entered the U.S. market after acquiring a regulated exchange operator and winning CFTC approval to operate as a registered designated contract market. 

Kalshi, meanwhile, has handled billions in trading volume, especially on questions tied to major sports leagues, elections, and economic events. These developments drew attention not just from regulators but also from legislators. 

A proposed Public Integrity in Financial Prediction Markets Act of 2026 would seek to ban government officials from trading on contracts related to their official duties, after a controversial high-stakes trade on a Venezuelan political outcome sparked concern about insider trading. 

Industry and market impacts

The regulatory pivot could have far‑reaching effects. Proponents argue a clearer federal framework will reduce legal risk, encourage responsible innovation, and support transparent markets. 

The critics fear that the state regulators will still push their own standards, resulting in a patchwork of regulations that do not reflect the federal intentions. Daily volumes and contract offerings are growing, which investors and traders are observing. 

While some states continue enforcement actions, federal efforts to harmonize rules may impact where and how prediction markets operate, especially if legislation formalizes the CFTC’s authority over event contracts. 

Looking ahead

As Selig and the SEC coordinate on digital asset and prediction market rules, stakeholders across finance, gaming, and technology will be closely tracking how these regulatory contours take shape. 

The outcome will affect not only specialized platforms like Kalshi and Polymarket but any exchange offering predictive financial products tied to real‑world events.

Also Read: Vitalik’s “Anti-Crazy Mode” Nets $70,000 on Polymarket

Bitcoin extended its sharp sell-off late Thursday, falling nearly 7% in 24 hours to trade around $82,000 after briefly dipping as low as $81,000 during U.S. trading hours. 

The decline erased multi-month gains from Bitcoin’s price in a single day and triggered a wave of forced liquidations across the crypto market, highlighting renewed fragility in risk assets. 

According to CoinGlass data, more than $880 million worth of crypto long positions were liquidated within one hour during the steepest part of the drop, with total liquidations reaching about $1.68 billion over the past 24 hours. 

The broader cryptocurrency market followed Bitcoin’s decline, with major tokens falling between 7%–9%. Ethereum was hovering close to $2,750, as BNB and XRP were trading at approximately $850 and $1.75, respectively.

At current levels, Bitcoin is trading just above its November dip near $81,000. Market participants are closely watching this zone, as a decisive break could open the door to a deeper move toward the April 2025 lows near $75,000, which formed during tariff-related market stress earlier in the year.

Fed leadership speculation rattles risk assets

One of the factors weighing on sentiment appears to be renewed uncertainty around U.S. monetary policy leadership. Traders reacted to reports that President Donald Trump may nominate former Federal Reserve Board member Kevin Warsh to replace current Fed Chair Jerome Powell. 

Trump said he would announce his nominee on Friday, a day after publicly criticizing the Fed for not cutting interest rates. Prediction market Polymarket showed odds of Warsh being selected surging to 90%, up sharply from 37% just hours earlier.  

Before the shift, some investors had expected a more dovish candidate, such as BlackRock fixed-income chief Rick Rieder. This threat of an even more aggressive Fed policy puts additional strain on already weak crypto markets, which are extremely sensitive to liquidity expectations.

Analysts see correction, not collapse

Despite the sharp move, several analysts describe the current decline as a corrective phase rather than a structural breakdown. Technically, Bitcoin failed to hold a rebound above $83,800, keeping downside risks in focus. Some analysts now point to the November low near $80,600 as a near-term test.

Market analyst CryptoZeno noted that Bitcoin’s returns have turned negative in recent months, down about 26% since last July, following a strong expansion phase in mid-2025. 

The concept of leverage unwinding is supported by derivatives data. Previous declines of 8% to 10% in futures open interest have been accompanied by local price lows, such as declines in February-March, early April, and mid-November 2025.

These patterns suggest forced selling may be approaching exhaustion rather than signaling a prolonged downtrend.

Strategy stock slides as Bitcoin breaks key support

The sell-off also hit crypto-linked equities. Strategy Inc. (NASDAQ: MSTR), widely known for holding Bitcoin as a core treasury asset, fell as much as 9.63% on Thursday, trading near $143, close to its 52-week low. 

The stock often amplifies Bitcoin’s moves due to the company’s large exposure. Earlier this week, Strategy bought 2,932 BTC for $264 million, lifting its total holdings to 712,647 BTC, roughly 3.4% of Bitcoin’s fixed supply. 

While the accumulation underscores long-term conviction, the recent price drop highlights the short-term volatility risks tied to corporate Bitcoin strategies. Investors are, at least, considering macro uncertainty, heavy lever unwinds, and key technical levels. 

It will probably be determined by the overall market response to the changes in Fed leadership and liquidity expectations in the coming days whether Bitcoin will stabilize around the existing support or fall further.

Also Read: Bitcoin Falls Below $85K as $850M Gets Liquidated in Market Sell-Off

The U.S. Securities and Exchange Commission (SEC) has clarified that tokenized securities remain subject to federal securities laws, reinforcing that placing a financial instrument on a blockchain does not alter its legal status. 

The guidance was issued Wednesday through a joint staff statement from the SEC’s Divisions of Corporation Finance, Trading and Markets, and Investment Management. 

The statement is made in the context of increasing attention of financial institutions to the tokenization of traditional assets (stocks, bonds, funds) with blockchain technology. Although the agency recognized the operational distinction of on-chain recordkeeping, it still highlighted that the regulatory obligations are the same.

Legal obligations are not altered by blockchain format

The SEC states that securities issued or registered on a blockchain should be subject to the same registration, disclosure, and compliance requirements as those of securities issued using traditional systems. 

The agency claimed that the issuance format, on-chain or off-chain, does not influence the federal securities laws. On-chain transactions are transactions that are recorded on a blockchain as ownership and transfers instead of using the conventional databases. 

The SEC observed that issuers can issue tokenized securities in a separate category or in combination with conventional securities. In some cases, regulators can consider both formats as one and the same class under some laws as they have rights and privileges that are substantially similar. 

The main difference, which the statement clarified, is the way issuers keep records of shareholders. Rather than off-chain databases, issuers or their representatives can rely on a single or multiple crypto networks to monitor ownership, without altering the legal nature of the security.

Regulation arrives amid changing crypto enforcement

The explanation comes in the fact that the SEC has changed its approach to crypto regulation in the last year. During the Trump administration, the agency has abandoned or shut down over a dozen enforcement actions of big crypto companies. 

Some of those cases focused on the issue of whether digital tokens, staking services, or wallet infrastructure were unregistered securities.

Although the enforcement posture is less aggressive, the statement of Wednesday strengthens the legal basis of most of the previous cases by restating that the securities laws are applicable irrespective of the technological structure. 

Nevertheless, the guidance does not consider whether crypto-native products are securities in the first place, which is a question that is legally unanswered.

The clarification and its importance to markets

The declaration offers regulatory certainty to institutions that consider tokenized securities, especially with traditional finance starting to experiment with blockchain-based settlement and recordkeeping. 

Meanwhile, it is an indication that innovation will not spare products of regulation. Although the SEC has reduced certain crypto enforcement, it still pursues cases of activities like Bitcoin mining services, which it claims can be securities offerings. 

The guidance suggests that regulatory scrutiny will focus on economic reality rather than labels or technology. As tokenization gains traction, the SEC’s message is clear: blockchain may change how securities move, but not how they are regulated.

Also Read: Ondo Finance Demands Clear Rules for Digital Asset Securities from SEC

A low-profile crypto trader has drawn attention after he generated over $2 million in profits within 24 hours on the decentralized perpetuals exchange Hyperliquid, according to data from blockchain intelligence firm Arkham Intelligence. 

The trade highlights both the growing influence of on-chain transparency and the rising activity on decentralized derivatives platforms.

How the trade happened

Arkham’s on-chain analysis shows that the trader built roughly $4.5 million in leveraged long exposure to HYPE, Hyperliquid’s native token, shortly before a sharp price rally. 

Track Wanyewest on Arkham:https://t.co/lYebOUK3R7

— Arkham (@arkham) January 28, 2026

The gains came as HYPE surged from recent lows near $21 to around $34–35, marking a 50–65% increase in recent weeks. The trader’s positions were large enough to place them among Hyperliquid’s top daily performers. 

Arkham’s entity mapping linked activity across multiple exchanges, including Binance, showing how blockchain data can connect wallets and trading behavior even when identities remain anonymous.

The portfolio behind the gains was mostly a combination of ETH holdings with Hyperliquid perpetual contracts, which confirms a trend in which traders pledge ETH to gain access to high leverage derivatives on decentralized exchanges.

Hyperliquid’s growth and the HYPE rally

The trade occurred amid a broader resurgence in Hyperliquid’s ecosystem. One of the main forces has been the fast implementation of HIP-3, which enables users to open decentralized perpetual markets through the staking of HYPE.

This has expanded trading beyond crypto assets into commodity-linked perpetuals, including gold and silver. Open interest on HIP-3 markets recently climbed to over $790 million, up from around $260 million a month earlier. 

HIP-3 open interest reached an all-time high of $790M, driven recently by a surge in commodities trading.

HIP-3 OI has been hitting new ATHs each week. A month ago, HIP-3 OI was $260M.

— Hyperliquid (@HyperliquidX) January 26, 2026

Trading activity has also intensified, with Silver-USDC perpetuals posting more than $1.2 billion in 24-hour volume, making it one of the platform’s most actively traded contracts.

Hyperliquid routes 50% of trading fees into HYPE buybacks, a mechanism that analysts say has supported token demand alongside reduced sell pressure following earlier staking unlocks.

Similar high-risk wins

This is not an isolated case. Hyperliquid has experienced several big trades in recent months such as a $1.5 million deposit turned into $875,000 in profit with leveraged HYPE longs, and a position scaled to $8.1 million that earned over $1 million in unrealized gains.

In January 2026, another trader who invested $85, made over $115K on a Chinese memecoin. Nonetheless, according to the market observers, these gains are associated with a lot of risk. Extremely high leverage on perpetuals has also resulted in the loss of multimillion dollars when the market turns.

Another example just this week in Solana, a wallet made $285 into $627,000 in a 24-hour timeframe by buying the new ZReaL token, which brought up the issue of timing benefits and insider trading.

These incidents highlight the way decentralized trading platforms are transforming market participation, providing transparency and extreme volatility. Although big wins get attention, analysts warn that big wins are an exception, not a rule, particularly in high-leverage settings.

Also Read: Polymarket Whale Turns Fortunes with $6.12M Profit in Just 24 Hours

Arthur Hayes, Co-Founder of BitMEX, says Bitcoin could see a strong upside move if the US Federal Reserve intervenes in Japan’s currency and bond markets through balance sheet expansion. 

In his latest essay titled “Woomph,” Hayes argues that stress in the Japanese yen and government bond market may eventually force central banks to inject fresh liquidity into the global financial system, a development that has historically supported Bitcoin prices.

Hayes uses the metaphor of a “woomph,” a sound that signals hidden danger in a snowpack, to describe recent market signals coming from Japan. According to him, the sharp weakening of the yen alongside rising yields on long-term Japanese Government Bonds (JGBs) is an unusual and troubling combination. 

“Woomph” is a an essay on my theory about how the Fed could be printing money to manipulate the yen and JGB markets. If true money printer go fucking BRRRR!

https://t.co/VdCUcd784t pic.twitter.com/loIlR5nOd0

— Arthur Hayes (@CryptoHayes) January 27, 2026

Normally, a country’s currency strengthens when bond yields rise, reflecting investor confidence. Japan’s divergence, Hayes notes, suggests growing strain beneath the surface.

Why Japan’s bond and currency stress matters

Japan plays a major role in global financial markets. Its investors hold one of the largest foreign investments in the US Treasury bonds, and the nation is highly dependent on imports, in particular, energy.

A weaker yen raises inflation risks for Japan, while higher JGB yields increase borrowing costs for the government and pressure the Bank of Japan’s balance sheet. Hayes argues that the Japanese authorities should not be able to stabilize these markets otherwise the US can intervene to safeguard its interests. 

Japanese investors selling US Treasuries in large amounts in a brief period would drive up US yields at a time when Washington is already operating at historically large deficits. 

To avoid this instability, Hayes thinks that the Federal Reserve might act indirectly by increasing its balance sheet to boost the prices of the yen and the JGBs. 

“The line item to monitor is Foreign Currency Denominated Assets,” Hayes emphasized. “They will not provide a detailed breakdown of exactly which assets it owns. We must infer from JGB price action whether the Fed is present. “

Such intervention, he explains, would involve the New York Fed creating new dollar liquidity, exchanging it for yen, and potentially buying Japanese government bonds. This process would increase the Fed’s balance sheet and inject more dollars into the financial system.

Implications for Bitcoin and crypto markets

Hayes says this type of liquidity expansion would be positive for Bitcoin. Historically, Bitcoin has been doing well when central banks inject more money into the economy because investors seek an alternative to fiat currencies.

While Hayes cautions that the impact may not be immediate, he believes sustained balance sheet growth would eventually lift Bitcoin and other crypto assets in nominal terms. 

“Bitcoin will pump alongside a growing Fed balance sheet (gold). It might not happen on your timeframe if you are 100x leveraged trading 1m candles on some shitcoin perp, but Bitcoin and quality shitcoins will mechanically levitate in fiat terms as the quantity of paper money rises,” he said. 

Recent market activity supports his broader thesis. In the last year, Bitcoin has been mostly trading flat even with the interest rate cuts in the US indicating that traders are waiting to see more indicators of new liquidity and not policy signals alone.

Current Bitcoin Market Snapshot

The current price of Bitcoin was $88,753.36 and the 24-hour trading volume was $38.17 billion at the time of writing. It is down nearly 10% from the month high, according to CoinMarketCap data. 

While Hayes’ analysis remains a theory and not a proven policy outcome, it points to the way in which the traditional financial market changes, especially in Japan, might determine the next significant step of Bitcoin.

Also Read: Strategy Inc Buys 2,932 Bitcoin for $264M; Total Holdings Hits 712,647

Digital asset manager Bitwise has taken its first direct step into decentralized finance (DeFi) by launching non-custodial on-chain vaults in partnership with lending protocol Morpho. 

The firm confirmed the launch on January 26, and it was a change of direction in its traditional emphasis on exchange-traded products and research targeting institutional investors. 

A shift beyond ETFs and traditional crypto products

The new product allows users to earn yield on stablecoins while retaining full control of their funds. Instead of transferring custody, investors deposit assets into an onchain vault that is managed through smart contracts. Bitwise curates the strategy and oversees risk, but all execution happens transparently on-chain. 

According to Bitwise, the first vault focuses on stablecoins and deploys capital into overcollateralized lending markets on Morpho. The strategy currently targets returns of up to 6% annually, though actual yields may vary depending on market conditions.

“Finance is moving onchain. Vaults are a key part of that, offering investors a transparent way to earn digital yield on their assets,” Bitwise said in a post on X announcing the launch.

Finance is moving onchain. Vaults are a key part of that, offering investors a transparent way to earn digital yield on their assets.

Today, we’re excited to announce that Bitwise is launching non-custodial vault strategies as a curator on @Morpho.

The quick details:

-… pic.twitter.com/pUz9Upk4lV

— Bitwise (@BitwiseInvest) January 26, 2026

How the vault works and why it matters

The vault allocates deposited funds to lending pools where borrowers provide excess collateral, reducing counterparty risk compared to unsecured lending models. All positions remain visible on-chain, and users can withdraw funds at any time, unlike some staking or locked-yield products.

Strategy design and real-time risk oversight are led by Jonathan Man, CFA, Bitwise’s Portfolio Manager and Head of Multi-Strategy Solutions. The firm said the vault leverages infrastructure and risk frameworks it has developed over several years managing crypto investment products.

“Decentralized finance, or DeFi, offers compelling yield opportunities, but the complexity of managing onchain risk has kept many investors on the sidelines,” Man said. “Bitwise provides value-add by layering professional guidance and  risk management experience onto these non-custodial tools.”

The move comes as asset managers increasingly explore blockchain-based financial infrastructure rather than relying solely on regulated wrappers such as ETFs. While Bitwise has been best known for serving traditional investors, the Morpho vault signals a broader industry trend toward treating DeFi as core financial infrastructure.

Morpho’s growing institutional footprint

Morpho has become a prominent platform of curated lending strategies, where professional managers can create custom vaults with standardized smart contracts. The protocol is now the seventh-largest DeFi platform by total value locked (TVL), having a fund of approximately $6.7 billion, as per DeFiLlama. 

The platform’s growth accelerated in late 2025 following partnerships with Coinbase, Crypto.com, and Société Générale’s digital asset unit SG-FORGE. Earlier this week, Morpho also announced that curated vaults from Sentora had been integrated into Kraken’s DeFi Earn program. 

Kraken's DeFi Earn has integrated @SentoraHQ curated vaults that allocate to Morpho.

DeFi Earn connects users to the best onchain yield opportunities, all within @krakenfx. pic.twitter.com/dbY3wCp8qL

— Morpho 🦋 (@Morpho) January 26, 2026

“Bitwise joining Morpho as a vault curator highlights growing institutional demand for allocating capital onchain through noncustodial infrastructure,” Morpho Co-Founder and CEO Paul Frambot said.

What comes next for Bitwise’s DeFi strategy

Bitwise has not disclosed performance data or timelines for expanding its vault offerings. However, the firm previously predicted that on-chain vaults, often described as “ETFs 2.0” could double assets under management in 2026. 

The Morpho launch appears to be an early step in that longer-term strategy, as traditional asset managers cautiously deepen their involvement in decentralized finance.

Also Read: Bitwise Launches BPRO: The First Actively Managed ETF Combining BTC & Gold