Bybit Report: Bitcoin Holds Steady Amidst Altcoin Market Turmoil in 2025

Bitcoin has demonstrated resilience in the face of the latest market volatility, holding its ground while altcoins took a significant hit at the start of 2025. According to a report from Bybit, altcoins experienced estimated liquidations of between $8 billion and $10 billion, with funding rates turning deeply negative as the market endured sharp price swings and rising uncertainty.

Bitcoin Outperforms the Market

Amid the recent market sell-off, Bitcoin emerged as a relative outperformer. Bybit highlighted that Bitcoin's performance in perpetual swaps was more stable compared to other assets in the crypto market, underscoring its strength as a store of value in uncertain times. The report notes that despite a broader downturn in the market, Bitcoin's position remained steady.

In contrast, Ethereum's (ETH) market took a harder blow, with options experiencing a sharp surge in short-term volatility that pushed the volatility index above 140%, marking its highest level in over three months. Bybit also noted that other altcoins, such as Solana (SOL) and XRP, were particularly vulnerable to the volatility, with their perpetual swaps seeing significant losses.

Massive Liquidations Across the Market

The crypto market witnessed severe liquidations during the sell-off, particularly in altcoins. Bybit’s CEO, Ben Zhou, estimates that the total value of liquidated positions could be between $8 billion and $10 billion. The turmoil caused over $3.1 billion in open interest to disappear in just one day across Bitcoin (BTC), Ethereum (ETH), XRP, and Solana's perpetual swaps after a late-Friday market peak.

The swift liquidation of positions exacerbated the sell-off, leading to sharp price declines for many altcoins, while Bitcoin's market behavior remained notably more stable.

Bearish Shift in Altcoin Funding Rates

The liquidity crunch led to a deepening bearish sentiment for many altcoins. Bybit’s report notes that funding rates for altcoins became significantly negative in the aftermath of the crash, indicating a pessimistic outlook among traders. On the other hand, Bitcoin’s funding rates remained more stable, signaling stronger investor confidence compared to the rest of the market.

Open interest levels also saw a sharp drop for many major altcoins, though Bitcoin’s options market remained relatively unaffected by the massive sell-off. Bitcoin options saw no major liquidation event, and any term structure inversion quickly corrected, further highlighting Bitcoin’s relative stability during the period of market chaos.

Surge in Trading Volume Amid Market Turmoil

Despite the volatility, trading volume surged significantly. Bybit reported that over $31.1 billion in perpetual swaps were traded on February 2, marking the highest daily volume seen in over a month. This surge in trading activity signals ongoing investor engagement and a degree of stability returning to the market, particularly for Bitcoin.

For Bitcoin options, short-term volatility appears to have eased after an early-week spike, signaling that, at least in the short term, market participants are finding more balance as the asset settles after the dramatic moves earlier in the week.

Looking Ahead

The market’s response to this latest bout of volatility shows a clear distinction between Bitcoin’s relative stability and the more turbulent conditions surrounding altcoins. As Bitcoin continues to outperform other cryptocurrencies, many traders and investors are left to assess the market's next moves and the potential for further instability, especially with altcoins.

While the market faces uncertain conditions, Bitcoin’s strength amidst adversity suggests that it remains a critical asset in the broader crypto landscape. As traders and investors navigate these volatile conditions, many will be closely watching Bitcoin’s performance and the continuing challenges faced by altcoins in 2025.