Markets
What Happened to Our Bags?
On Saturday, >$70B was wiped out in 45 minutes.
Almost everything in crypto got torched. $BTC dumped to $75k. $ETH crashed to $2.2k. $SOL cratered to $98.
It wasn't one thing. It was a pile-up of bad news hitting thin weekend liquidity.
Let's break down the bearish cocktail.
#1. Crypto Sentiment
Crypto is anchored to BTC.
And the market was losing confidence in BTC (& Crypto). While metals and Gold were hitting new ATHs, $BTC kept sliding. This created holes in the "Digital gold" narrative. The "debasement narrative" wasn't playing out.
By January 30th, it had already dropped to $84k.
This was intensified by other factors.
- Partial US govt shutdown.
- Dicey geopolitical situations with Iran, Russia, and Venezuela.
- The tariff uncertainty is still present. Trade wars aren't over yet.
#2. Fed Chair & Rates
In this context, Trump nominated Kevin Warsh as the next Fed chairman.
Warsh was known as someone who didn't like turning on the money printer. Since crypto investors were hoping for a massive money printer as the next chair, this was bearish news for risk assets.
The announcement was followed by the US Dollar Index (DXY) recording its largest single-day gain since July 2025.
Additionally, Fed rates held steady at 3.5%-3.75% in January after three cuts in late 2025.
The inflation is still at 2.8%, above the 2% target. So the markets pricing at most two cuts in 2026.
Higher for longer. Not great for crypto.
This announcement was the primary catalyst for the crash.
#3. Metals historic crash
On January 30th, gold and silver had a historic crash as well.
Gold plunged about 12% from its all-time high near $5,600 per ounce, while silver suffered a staggering 35% drop from its peak above $121 per ounce, marking one of its worst single-day declines since 1980.
Over $7 Trillion was erased from the precious metals in just 36 hours.
This should've increased panic among investors. On the weekend, with already thin liquidity, this would've contributed to the crash.
Since then, metals have recovered. Most people viewed that even as a correction within a broader, bullish metals market.
The crypto is still uncertain. Many analysts are treating it as a bear market.
#4. Market Structure & Liquidations
Volatility in crypto is amplified by liquidations. I've explained the mechanisms several times. So I won't bore you with it again.
The usual story repeated on this crash as well. According to Coinglass, total liquidations across the network was >$2.56 billion within a 24-hour window. This was the strongest crash since 10/10 disaster.
On the US ETF front, 2026 wasn't very kind. BTC ETFs only had 8 days with positive inflows. ETH ETFs only had 10 days of positive inflows.
When the price fell massively, it led to "Treasury company FUD" as well.
The average cost of BTC for Strategy, the treasury company by Saylor, is ~$76k So when the price fell to $75k, many were worried about Strategy being forced to sell.
Bitmine from Tom Lee is the leading ETH treasury company. It is down >$6.5 billion on its ETH purchases. Fortunately for BMNR, it doesn't have any debt that'll force it to sell ETH.
While it is important to track DATs, I don't think we have to worry about these two giants dumping all of it on the market. At least not yet.
#5. Binance Drama
While this isn't a direct cause of the crash, it shows people losing trust in the crypto market infrastructure.
On X, many are accusing Binance of amplifying the October 10th flash crash. It was a key event that weakened the market structure.
Prominent figures, like Cathie Wood, linked the flash crash with "software problems" on Binance. While Binance has acknowledged software issues, it has denied blame.
OKX founder went further. He blamed Binance's irresponsible USDe promotion as the main culprit. As we covered earlier, USDe depegging was a major element of the 10/10 crash.
Ethena defended itself by pointing out that USDe depegged 30 minutes after BTC bottomed. So, USDe cannot be the culprit. Hoseeb from Dragonfly also defended Ethena.
Additionally, after the crash, Justin Sun's ex has claimed that she has evidence that Justin Sun has manipulated the price of $TRX on Binance to dump on retail. This eroded trust further.
As I've said before, I've adjusted my portfolio to survive bearish conditions. A recovery will require a notable shift.
On the other hand, crashes like this are a good opportunity to find tokens that are still holding strong. I've found a few. If you're interested, let me know by replying to the email. I'll cover them in the next newsletter.
Sponsored Deep Dive
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In current crypto market conditions, yield farming is the best strategy.
But let's be real - most people don't do it, especially not in its current form.
For the average person, it's too much work. Tracking best rates, calculating risk-reward, switching between protocols, approving countless transactions, paying high gas fees, and more. Even for someone who lives onchain like me, yield farming can feel like more effort than it's worth.
So, how do we make it more accessible?
Enter SummerFi. They're building a smooth front end to DeFi.
SummerFi Pro is their old product. It gives users intuitive access to main DeFi activities: swap, earn yield, borrow money, and even take leverage. It's great for experienced DeFi users who want to control everything manually.
But they're transitioning SummerFi Pro in DeFi Saver. From February 12, 2026, all users with Borrow, Multiply, or Yield Loop positions on Summer.fi Pro will need to manage these positions through DeFi Saver.
Lazy Summer Protocol is their second product.
It's an automatic yield optimization protocol. And they're going all-in on this.
It's designed to be accessible to even normie users. It's like having a smart friend who'll earn yield for you, but even better.
And using it is ridiculously simple:
- You deposit crypto to vaults that meet your risk parameters.
- In the backend, SummerFi will farm from the 60+ protocols it has integrated.
- You can withdraw the principal and yield anytime you want from the vault
That's it. No manual farming, no constant monitoring — just easy, automated yield.
The protocol can employ the following strategies to earn yield:
- Lending: Collecting interest by providing liquidity to borrowers.
- Basis Trading: Profit from the price differences between spot and futures markets.
- Rates Trading: Take advantage of interest rate fluctuations in DeFi.
- Yield Farming: Staking or providing liquidity to protocols will generate yield.
Obviously, Lazy Summer has to integrate with other DeFi protocols to access these. It has already integrated with AAVE V3, Spark, Morpho, Gearbox, Fluid, Pendle, Sky, and Compound V3.
In the backend, "The Rebalancer" will monitor yield strategies and deploy assets to top-performing farms. "FleetCommander" will ensure funds are moved responsibly, with limits on frequency and volume.
If you are curious about deeper technical details, check out their documentation.
When you first hear about too-good-to-be-true phrases like "easy-to-use" and "automated yield", your reaction might be, "Is this actually safe?"
Short answer: Yes.
Long answer: SummerFi is one of DeFi's most trusted platforms.
They have a strong track record. This protocol has been live for almost a year and has integrated 65 protocols to source yield. The team is much older. They were spun out of MakerDAO, the OG issuer behind $DAI.
They're not some random memecoin team looking for exit liquidity.
To further ensure security:
- ChainSecurity has audited the Lazy Summer Protocol. You can check out the full report here.
- Block Analytica, a top risk management firm, is handling risk assessment for Lazy Summer's vaults.
Like any DeFi protocol, there are still risks. But SummerFi is as secure as it gets in this space.
Why use the SummerFi?
AI is automating everything. If you want to adapt to the times, you need to automate your tasks as well.
SummerFi is the leading platform for automating yield farming.
#1. Auto-rebalancing will give you a better return than manual farming.
Most of the DeFi farms have variable yields. It means that the risk:reward of farms changes every minute. To get maximum yield, you need to constantly rotate to better farms.
Doing this manually means hours of research and transactions, high gas fees, and unnecessary stress. Or… you could just let SummerFi's Rebalancer do it for you—ensuring your funds are always in the top-performing strategies.
Click here to see all the rebalancing activity from the protocol.
#2. It has great UX that even your normie cousin can use.
For normies, even getting started is hard in DeFi. Setting up wallets, securing seed phrases, and dealing with bridges and gas fees repel most new users.
Lazy Summer removes all those.
- Users can log in with Email, Social accounts, and Passkeys.
- The app will pay the gas fee for the first 10 transactions on Base or Arbitrum.
- Built-in fiat onramps to buy crypto easily.
- Intuitive UI that helps even normies to deposit crypto.
Voila... Now even your grandma can go from a complete noob to a DeFi yield farmer with a couple of clicks.
#3. Proven track record.
SummerFi has been live for almost a year and has integrated 69 markets to source yield.
This addresses one of the biggest challenges in crypto: the reliability of smart contracts. Since it hasn't been hacked despite being live for a long time, it shows that it's reliable.
You can track SummerFi's growth during the period here.
Recently, their token became fully tradable.
$SUMR: Native Token of SummerFi
The TVL growth of SummerFi should increase the value of $SUMR.
Each SummerFi vault charges a fee on the total assets under management, roughly 0.66% annually for DAO-managed vaults. It's the primary revenue generator for the protocol.
SummerFi directs its value towards $SUMR stakers. It gets:
- Part of the SUMR token emissions will go to stakers
- A share of protocol revenue is distributed in USDC to stakers.
- Governance power, such as the authority to approve or offboard markets.
- Power to decide how protocol resources are deployed. Whether it's funding contributors, growing the product, or rewarding (e.g., through USDC) long-term stakers.
If you wanna learn more about the token, click here.
If you want to automatically farm the highest quality yields in DeFi,
🚀 DeFi Catalysts
Hyperliquid introduced HIP-4. It's their version of prediction markets. It is now being tested on the testnet.
Polymarket is expanding to Solana. They're partnering with Jupiter to bring prediction markets to Solana users.
Lighter introduced Lighter EVM to add programmability. It's an EVM-equivalent rollup natively interoperating with its perp platform.
Virtuals introduced 60 Days. It allows founders to build publicly for 60 days while real users discover the product and capital accumulates.
Curve Finance's crvUSD is facing depegging pressure due to the market conditions and the leveraged structure of YieldBasis.
Lido has launched Lido v3 on the Ethereum mainnet. It introduces stVaults, which enable custom validators alongside optional stETH liquidity.
Zksync introduced the ZKnomics Staking Pilot Program. It'll allow $ZK holders to stake their tokens via Tally and receive rewards for governance participation.
Wonderland introduced Interoperable Addresses for the Ethereum ecosystem. With EF, they're working on an SDK that wallets can easily integrate.
📰 Industry News
President Donald Trump has nominated Kevin Warsh as the next Fed chair. Jerome Powell's term will end in May.
UAE's National Security Advisor and Deputy Ruler of Abu Dhabi has reportedly bought 49% stake in $WLFI, the Trump family's crypto project.
VanEck launched the Avalanche spot ETF VAVX on Nasdaq. Theoretically, this would've been a good source for inflow.
Ripple got a Full EU Electronic Money Institution License in Luxembourg.
🐦⬛ X Hits
- A 59-page $HYPE thesis.
- Really good trading lessons.
- 80/20 of the tokenized agents narrative.
- Everything you need to know about perps.
- Vitalik's design for creator coins.
😂 Meme
Until next time,
Edgy
P.S. The new live cohort of TDE Pro starts on Monday. If you're feeling lost in crypto, join us.
Today's email was written by Edgy and Yayya.
DISCLAIMER: I'm NOT a financial advisor. This content is for education and information purposes only. Crypto and DeFi are risky and speculative. Please do your research before investing.
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