Crypto's latest selloff was a TradFi event, not a crypto crisis

Markets Share Share this article Copy link X icon X (Twitter) LinkedIn Facebook Email Crypto's latest selloff was a TradFi event, not a crypto crisis Last week’s downturn was driven by yen carry trades and macro leverage, highlighting how deeply digital assets are now tied to traditional markets, panelists at Consensus Hong Kong 2026 said. By James Van Straten , AI Boost | Edited by Jamie Crawley Feb 11, 2026, 12:54 p.m. Make us preferred on Google (l-r) Fabio Frontini, CEO of Abraxis Capital Management, Emma Lovett, Markets DLT credit lead at JPMorgan, Thomas Restout, group CEO of B2C2, Omkar Godbole of CoinDesk: Consensus Hong Kong 2026 (CoinDesk) What to know : Panelists said yen carry trade unwinds and rising margin requirements pressured crypto alongside gold and silver. Despite volatility and outflows, roughly $100 billion remains in bitcoin ETFs. A more permissive regulatory climate is pushing institutions toward public blockchains and stablecoin-based settlement. HONG KONG — Last week’s sharp crypto sell-off was less a replay of 2022’s scandals and more a macro-driven unwind spilling over from traditional finance, according to market participants at Consensus Hong Kong 2026 . “After Oct. 10th, a lot of people had already reduced risk,” said Fabio Frontini, founder of Abraxas Capital Management. “This is just a spillover from TradFi entirely… it’s all interconnected now.” STORY CONTINUES BELOW Don't miss another story. Subscribe to the Crypto Daybook Americas Newsletter today . See all newsletters Sign me up By signing up, you will receive emails about CoinDesk products and you agree to our terms & conditions and privacy policy . Panelists pointed to the unwinding of yen carry trades as a key catalyst. Thomas Restout, group CEO of B2C2, described the mechanics: investors borrow in low-interest-rate currencies like the yen and deploy that capital into higher-yielding or risk assets, including bitcoin, ether, gold and silver. “What does that mean? That means people borrow currencies that have cheap interest rates, and they use it to put on carry trades,” Restout said. The yen carry trade refers to investors borrowing Japanese yen at low interest rates, converting it into other currencies then investing into higher-yielding assets. However, should yen strengthen, investors have to buy it back to repay loans, causing the trade to "unwind" and trigger market volatility. As yen rates rose, borrowing costs increased. At the same time, higher volatility triggered steeper margin requirements. “In metals, it went from 11% margin requirements to 16%," Restout added. This forced some players to unwind positions as collateral demands surged. The result was broad pressure across risk assets, not just crypto. Exchange-traded funds (ETFs) tracking bitcoin also saw heavy volumes during the downturn, though panelists pushed back on the idea of full-scale institutional capitulation. At their peak, bitcoin ETFs totaled roughly $150 billion in assets; today they still hold around $100 billion, Restout said. Net outflows since October are about $12 billion—significant, but modest relative to total assets. “If anything, it means that the money is changing hands,” Restout said, suggesting rotation rather than wholesale exit. Looking ahead, Emma Lovett, credit lead for Market DLT at J.P. Morgan, said 2025 marked a regulatory inflection point. A more permissive U.S. backdrop has accelerated experimentation beyond private, permissioned blockchains toward public chains and stablecoin settlement. “What we started to see in 2025… is the introduction of using public chains and… stable coins for the settlement of traditional securities,” she said, signaling a deeper convergence of TradFi and crypto infrastructure in 2026. Consensus Hong Kong 2026 yen TradFi selloff AI Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards . For more information, see CoinDesk's full AI Policy . More For You Bearish sentiment prevails as bitcoin falls below $67,000, ether drops By Francisco Rodrigues , Saksham Diwan | Edited by Sheldon Reback 1 hour ago Bitcoin and ether extended declines, dragging down crypto-related stocks, even as gold and silver rallied. What to know : Bitcoin and ether extended declines, dragging down crypto-related stocks, even as gold and silver rallied. Derivatives data show an extended deleveraging in bitcoin futures, with negative funding rates, cooling institutional demand and elevated options skew signaling defensive positioning despite some bottom-fishing. Onchain lender Spark debuted new institutional products that link offchain, custodied assets to DeFi markets, helping manage over $9 billion in stablecoin liquidity as its SPK token outperforms the broader crypto market. Read full story Latest Crypto News As bitcoin extends declines, industry figures say it's time to buy 28 minutes ago Aviva Investors to tokenize funds on XRP Ledger in Ripple partnership 53 minutes ago Franklin Templeton and SWIFT say the future of banking is 24/7 and natively on-chain 1 hour ago Bearish sentiment prevails as bitcoin falls below $67,000, ether drops 1 hour ago Joe Lubin claims DeFi is as safe as traditional finance, adding that bitcoin is in crisis 1 hour ago Regulation, derivatives helping drive TradFi institutions into crypto, panellists say 1 hour ago Top Stories Crypto's banker adversaries didn't want to deal in latest White House meeting on bill 13 hours ago SkyBridge's Scaramucci is buying the bitcoin dip, calls Trump a crypto president 10 hours ago Tokenization still at start of hype cycle, but needs more use cases, specialists say 2 hours ago Hong Kong working to allow perpetual contracts, chief regulator says 7 hours ago Citadel Securities backs LayerZero as it unveils ‘Zero’ blockchain for global markets 15 hours ago Crypto PAC Fairshake leaps into first midterm Senate race with $5 million in Alabama 13 hours ago