Headline: Bitcoin sell-off from $85K to $60K sends options volatility surging — Matrixport warns markets are at an “inflection point” Matrixport’s latest research note (Crypto at an Inflection Point — Feb. 20, 2026) says the recent sharp Bitcoin move has pushed crypto markets toward a critical junction. A rapid drop in BTC sparked a spike in implied volatility across the options market, followed by a partial unwind — a pattern the firm says has important implications for liquidity, positioning and near-term price dynamics. What happened - Bitcoin plunged from roughly $85,000 to about $60,000, briefly accelerating downside pressure before settling at a lower level. - Implied volatility on March 2026 expiry options jumped from ~40% to about 65% during the sell-off, signaling heavy demand for downside protection. - After the initial panic, implied vol eased back toward ~50% as many “tail risk” hedges were unwound and immediate short-term pressure moderated. Matrixport’s read: still a high-volatility environment The research note stresses that despite the partial volatility pullback, the market remains highly volatile and investor sentiment is “extremely pessimistic.” Liquidity is continuing to drain from crypto markets: total position sizes have fallen as traders pare back hedges against collapse scenarios, weakening overall market participation. Why this matters Matrixport points out that the combination of elevated volatility, lower sensitivity (reduced position sizing) and thinning liquidity has historically preceded strong upward moves in crypto markets. In other words, sharp volatility spikes and liquidity evaporation can set the stage for powerful rebounds once selling pressure abates — though there are no guarantees. Outlook and what to watch Matrixport notes some tentative improvements in macro conditions, but crypto prices have yet to meaningfully respond. Traders and observers should monitor: - implied volatility and option skew for signs of renewed hedging demand or complacency, - liquidity metrics and position sizes across spot, derivatives and ETF flows, - stablecoin liquidity and macro data that could trigger renewed risk-on moves. Bottom line: the sell-off has forced a re-pricing of risk across the options market and drained liquidity, putting crypto markets at a potentially pivotal moment — one that historically has sometimes preceded strong rallies, but which depends on how liquidity, positioning and macro signals evolve. Read more AI-generated news on: undefined/news

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