The Pullback That Could Fuel the Next Run

Hi! In today’s edition:

• 😨 Recession fears crush crypto

• 🏦 SEC mulls exchange rule revision

• 🐋 Sky’s biggest ETH-backed loans face liquidation

• 🔄 Arbitrum kicks off new buyback plan

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Bitcoin Drops Below $77,000 as U.S. Recession Fears Grow

Bitcoin fell 5% in 24 hours to a low of $76,624 on Monday as broad risk-off sentiment took charge of the markets.

Ether saw a deeper 11% drop to a 16-month low below $1,800, while the overall crypto market shed $108 billion of market cap.

The massive declines across the board in crypto markets came after major U.S. stock indices ended significantly lower on Monday amid intensifying fears of a U.S. recession, with Beijing introducing a new set of retaliatory tariffs and the Canadian province of Ontario imposing a 25% surcharge on all electricity exports to the U.S. 

"Bitcoin’s 24-hour drop below $80,000 reflects a perfect storm: extreme fear, Trump-driven volatility and technical weakness,” said Mark Hiriart, head of sales at digital asset trading firm Zerocap. “Unlike 2022’s crypto-specific crashes, this is a global correction, with USD$5.5 trillion erased from the S&P 500 and crypto markets in two months.”

“Investors are dumping risk assets as outflows hit USD$867M last week,” Hiriart said. “The Fed’s rate cut tease isn’t calming anyone — sticky inflation and tariff threats are fueling a flight to safety. BTC is not the hedge people hoped; it’s bleeding with tech stocks.

“This market crash is engineered by [U.S. President Donald Trump],” said market commentator Alex Kruger on X. “With his tariffs, he's dismantled the U.S. exceptionalism trade, and the market is in full recession panic mode.”  

SEC Reconsiders ‘Exchange’ Definition Encompassing Crypto Platforms

The acting chair of the U.S. Securities and Exchange Commission, Mark Uyeda, has asked agency staff for options on abandoning part of an earlier SEC proposal that expanded the definition of exchanges to include crypto trading protocols.

“In my view, it was a mistake for the commission to link together regulation of the Treasury markets with a heavy-handed attempt to tamp down the crypto market,” Uyeda said at the Annual Washington Conference of the Institute of International Bankers on Monday.

The proposed rule was drafted at the tail end of Jay Clayton’s time as SEC chair and was interpreted by his successor, Gary Gensler, in a different way.

Rather than focusing on the issues related to government securities alternative trading systems, which was the original intent, Uyeda said the SEC had chosen to expand the definition of exchanges to include “communications protocols,” without a clear definition of what the term meant.

Sky Whales Face Liquidation as ETH Sinks 

Large ether-backed loans on DeFi protocol Sky, formerly known as MakerDAO, are facing liquidation as the price of ETH lingers at around $1,850.

Some $109.8 million would be liquidated on Sky if ETH dropped to $1,792, and another $124 million would be up for liquidation if ETH trades at around $1,830, data from DeFiLlama show.

But whether the whales have actually been liquidated remains unclear. Although the price of ETH fell to an intraday low of $1,760 on major exchanges, below the liquidation threshold, they still have a few hours to add collateral.

One whale alone risks losing their $109 million position, while another risks losing $121.8 million, blockchain wallet tracking firm Lookonchain found.

Among those rushing to add collateral to lending positions was a wallet suspected to belong to the Ethereum Foundation. 

Lookonchain found that the wallet deposited $56 million of ETH on Sky to lower the liquidation price.

Offchain Labs Plans ARB Token Buybacks

Offchain Labs, the entity behind the Arbitrum blockchain, on Monday announced a plan to add Arbitrum’s native token, ARB, to its treasury through a strategic purchase plan.

“It's never been more clear that the ecosystem is growing through technical advancements and strategic DAO initiatives,” Offchain Labs said on X. 

Offchain Labs said it intends to purchase ARB on the open market and via other transactions based on predetermined parameters. 

In March last year, Arbitrum unlocked more than $2 billion in ARB tokens for team members, advisors, and investors in Offchain Labs, the first in a series of regular monthly unlocks spanning the next three years.

Mantle is building the largest sustainable hub for on-chain finance. Launching three new core innovation pillars: Enhanced Index Fund, Mantle Banking and MantleX. 

• 🏦 Michael Saylor’s Strategy — formerly MicroStrategy — launched a $21 billion preferred stock offering on Monday to fund more bitcoin purchases, a move that could push the company’s holdings past 500,000 tokens.

• ⏳ Coinbase will introduce 24/7 Bitcoin and Ethereum futures trading for U.S. traders, making it the first regulated American exchange to eliminate traditional market downtime and compete with offshore platforms.

• 📉 Solana network fees dropped to their lowest weekly level since September last week, with total fees falling 85% from January’s peak, reflecting a broader decline in network activity and token price since the $TRUMP memecoin surge.

• 💵 The latest draft of the U.S. stablecoin bill proposes a power split between state and federal regulators, allowing states to oversee issuers with a market cap of up to $10 billion while imposing stricter transparency and anti-money laundering requirements.

• 🔧 Ethereum’s Holesky testnet regained finality after nearly two weeks of disruptions caused by a configuration bug, restoring stability as developers continue testing the upcoming Pectra upgrade.

• 🇹🇭 Thailand’s financial regulator approved USDT and USDC for trading on digital asset exchanges, aligning with global trends as stablecoins play a growing role in crypto transactions and payments.

• 📈 Investment management firm VanEck registered a spot Solana ETF in Delaware, sparking enthusiasm for SOL, while Sol Strategies announced plans to acquire three Solana validators, bringing its total staked holdings to 3.3 million SOL.

• 🇸🇻 El Salvador signed a crypto regulation agreement with Paraguay, its second international deal in three months as it seeks to expand its influence in shaping global digital asset policies.

1. Sepolia Pectra fork incident recap by Marius Van Der Wijden, an Ethereum developer

2. The Only Question That Matters in Bitcoin by Bitwise CIO Matt Hougan

3. DL News: Solana’s price crash will continue in March, bettors say

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