PANews reported on February 20th that Matrixport released a research report on its X platform, noting that Bitcoin's recent rapid decline caused implied volatility in options to surge before partially receding. Bitcoin's price fell from around $85,000 to a low of around $60,000, before stabilizing around $66,000. Simultaneously, the implied volatility for options expiring in March 2026 surged from just over 40% to a panic high of nearly 65%, reflecting a strong demand for downside protection during the decline. Subsequently, implied volatility fell back to around 50%, indicating that some tail risk hedging is being unwound, and short-term pressure has eased somewhat.

The crypto market is approaching a critical inflection point: volatility remains high, sentiment hovers at extremely low levels, and market liquidity continues to flow out. Traders are gradually unwinding their crash hedges, resulting in significantly lighter overall positions and a marked decrease in participation. Historically, this combination of characteristics has often preceded significant directional market moves. While the macroeconomic environment has improved, crypto asset prices have not yet followed suit, and this divergence is typically unsustainable in the long term.