Bitcoin remains under $80K as January prediction bets escape liquidation-induced crash: Asia Morning Briefing

Bitcoin Volatility Exposes Gap Between Prediction and Derivatives Markets

Bitcoin’s recent swings have highlighted a familiar pattern in crypto markets: derivatives traders moved quickly to hedge risk, while prediction markets adjusted far more slowly.

Welcome to Asia Morning Briefing, your daily summary of market moves and top stories during U.S. hours. For a detailed look at U.S. markets, see CoinDesk’s Crypto Daybook Americas.

As bitcoin slid, $75,000 put options saw open interest surge, and hundreds of millions of dollars in leveraged long positions were liquidated. Yet January prediction contracts—like those on Polymarket—showed only a gradual decline in upside conviction.

The reason is structural. Prediction markets focus on end-of-month outcomes, rewarding traders for where bitcoin finishes, not the short-term swings along the way. A violent two-day drop may matter little if a rebound is expected before expiry. Galaxy Digital research notes that these markets compress complex beliefs into binary outcomes, often overstating consensus and masking tail risk.

Derivatives markets behave differently. Data from Deribit shows put option open interest climbing almost to levels of the $100,000 call strike. Traders were buying protection as downside distributions widened and volatility spiked.

The contrast became clear when more than $500 million in leveraged long positions were liquidated in 24 hours during a thin weekend, primarily on perpetual futures exchanges where margin dynamics accelerate moves. For leveraged funds, these events are urgent; for prediction markets, they matter only if they affect the final outcome.

QCP’s 2025 year-end review describes crypto as operating at two speeds: structural optimism coexisting with sudden, leverage-driven drawdowns. Bitcoin didn’t fall below $75,000, but it also didn’t climb to levels prediction markets suggested—revealing how differently these markets measure risk.

Market Snapshot

• BTC: Just under $80,000 after leveraged long liquidations, with traders prioritizing downside protection.
• ETH: Around $2,300, continuing its multi-week slide as risk appetite stayed muted.
• Gold: $4,750 per ounce, down sharply from a $5,300 test earlier in the week.
• Nikkei 225: Slightly higher Monday, as China’s January factory activity expanded fastest since October, while South Korea and Hong Kong equities fell.

Crypto Headlines

• Exchanges sanctioned alongside Iranian officials in Trump administration Iran crackdown (The Block)
• Ethereum security focus: Foundation advances post-quantum security with leanVM and PQ signatures (CoinDesk)