Daily Crypto Signals: Bitcoin Mining Difficulty Plunges 11%, Ethereum Derivatives Signal Bullish Shift
Crypto markets showed signs of stabilization over the weekend as Bitcoin rebounded 20% from 15-month lows near $71,000, while Ethereum
Quick overview
- Crypto markets showed signs of stabilization as Bitcoin rebounded 20% from recent lows, while Ethereum's funding rates turned positive across major exchanges.
- ARK Invest continued its selling spree, disposing of $22 million in Coinbase shares, despite a 13% increase in Coinbase stock on Friday.
- Erebor Bank received the first national bank charter under Trump's second term, marking a significant institutional development in the crypto space.
- Despite the recovery, analysts remain cautious, predicting potential further declines in Bitcoin's price, with some suggesting a 'real bottom' may form below $50,000.
Crypto markets showed signs of stabilization over the weekend as Bitcoin BTC/USD rebounded 20% from 15-month lows near $71,000, while Ethereum ETH/USD funding rates flipped positive across major exchanges. Meanwhile, ARK Invest continued its Coinbase selling streak with a $22 million disposal, and the U.S. granted its first national bank charter of Trump’s second term to crypto-focused Erebor Bank.
Crypto Market Developments
This week, there was a lot of volatility in the cryptocurrency market. Bitcoin fell more than 50% from its recent peak before making a slight comeback. Severe winter storms that swept throughout the US during the slump caused electricity infrastructure disruptions and momentarily decreased mining hashrate. Market sentiment is still cautious despite the recovery, with many analysts cautioning that more declines could be in store.
Erebor Bank’s national charter was authorized by the Office of the Comptroller of the Currency on Friday, the first new bank approval under President Trump’s second term. This was a significant institutional breakthrough. With over $635 million in funding at launch, the cryptocurrency-friendly firm is supported by well-known investors including Andreessen Horowitz, Founders Fund, and Lux Capital. Erebor was founded by Palmer Luckey, a co-creator of Oculus and a board member, with the goal of catering to high-net-worth individuals, venture-backed businesses, and startups—a market that has been neglected since Silicon Valley Bank failed in 2023.
Cathie Wood’s ARK Invest, meanwhile, continued its Coinbase selling binge on Friday, selling $22 million worth of shares in three exchange-traded funds. After momentarily increasing its holdings earlier in the week, the company reversed course and sold 134,472 shares from ARKK, ARKW, and ARKF. Although shares are still down 26% year-to-date, Coinbase stock increased 13% during Friday’s session to settle at about $165 despite the institutional selling pressure.
Bitcoin Rebounds to $70,000
Over a 24-hour period, Bitcoin’s network mining difficulty dropped 11.1% to 125.86 terahashes, the largest single-adjustment decline since China’s 2021 mining ban. The sharp change reflects the impact of harsh winter storms on U.S. energy infrastructure, which temporarily decreased miner hashrate, as well as the overall market decline that caused Bitcoin’s price to plummet by more than 50%. Although the difficulty is expected to increase once again to roughly 132.9 T in the upcoming adjustment on February 20, the average block duration decreased from over 11 minutes to roughly 9.47 minutes.
Even if Bitcoin surged up to 3% on Sunday and broke beyond $71,000, a 20% recovery from Friday’s 15-month lows, many traders are not convinced that the decline is over. Filbfilb, an independent analyst, noted that Bitcoin is currently trading below its 50-week exponential moving average of $95,300 and compared it to the bear market of 2022. The “final capitulation hasn’t happened yet,” according to a number of analysts, including trader BitBull and analyst Tony Severino. They predicted that a “real bottom” may form below $50,000, at which point the majority of ETF buyers would be underwater. Checkonchain data shows that the average cost basis of U.S. spot Bitcoin ETFs is currently $82,000.
ETH Derivatives Flash Bullish Signs
At the time of publishing, Ethereum was trading between $2,000 and $2,089, a 14% decrease from the previous week’s level of almost $2,500. Derivatives data shows a sharp swing in market mood despite the price decline, with funding rates on major exchanges shifting from extremely negative to strongly positive. This reversal implies that traders have quickly transitioned from short positions motivated by fear to optimistic long exposure.
However, there may be higher risks associated with the bullish positioning. Indicating strong leverage on the long side, funding rates on BitMEX jumped to 0.049%, their highest level since October and far higher than the previous top of 0.03%. In the meantime, Binance funding rates moved back into neutrality after plunging to extremely low levels of -0.025% on February 5.
While history demonstrates that periods of extremely strong funding driven by leverage frequently raise the likelihood of liquidations and abrupt corrective swings rather than supporting persistent higher, analyst Amr Taha pointed out that this shift represents growing bullish sentiment. Despite the attitude shift, daily trading volume dropped 32.39% to $37.39 billion, indicating lower market activity.
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