The Daily: Analysts say full-blown bitcoin capitulation yet to come, Terraform Labs sues Jane Street over alleged insider trading, and more

The following article is adapted from The Block’s newsletter, The Daily, which comes out on weekday afternoons.

Happy Tuesday! Analysts warn bitcoin could face a "massive flush" toward the mid-$50,000 range as accelerating capital outflows, weakening ETF demand, and fragile macro conditions leave key support levels under increasing pressure.

In today's newsletter, with bitcoin in "extreme fear" mode, a full-blown capitulation may be yet to come. Plus, Terraform Labs sues Jane Street for alleged insider trading, Binance denies firing investigators over Iran flows, and more.

Meanwhile, Mark Zuckerberg's Meta reportedly may be ready to take another run at digital payments via a stablecoin integration this year.

P.S. Don't forget to check out The Funding, a biweekly rundown of crypto VC trends. It's a great read — and just like The Daily, it's free to subscribe!

Bitcoin tests $63,000 in 'extreme fear'; full-blown capitulation yet to come: analysts

Bitcoin (BTC) briefly fell below $63,000 earlier on Tuesday as "extreme fear" gripped crypto markets, with the Fear and Greed Index returning to a record bearish reading of 5.

• Analysts attributed the decline to deteriorating crypto-native sentiment, weak marginal demand, thinner liquidity, and continued deleveraging rather than a single macro catalyst.
• Meanwhile, spot bitcoin ETFs extended their longest outflow streak since March 2025, logging over $203 million in redemptions on Monday, signaling continued institutional de-risking.
• Analysts, including Bitrue Research Lead Andri Fauzan Adziima, said the latest selloff reflected a leverage-driven flush rather than full capitulation, with long-term holders largely retaining their positions while short-term traders face heavy losses.
• Bitcoin now trades in a critical $60,000 to $65,000 support zone that could determine whether the market stabilizes or enters a deeper bearish phase, they added.
• A decisive break below $60,000 could trigger cascading liquidations and push bitcoin toward the mid-$50,000 range or potentially as low as $47,000 in a worst-case scenario, the analysts said.

Terraform Labs sues Jane Street for alleged insider trading prior to Terra-Luna collapse

Terraform Labs' liquidation administrator sued Jane Street, alleging the firm used non-public information from insiders to front-run trades ahead of the Terra-Luna ecosystem collapse, according to the Wall Street Journal.

• The complaint claims Jane Street leveraged communications between a former Terraform employee and company insiders to obtain confidential information and execute profitable trades.
• The lawsuit cites a May 2022 incident where a wallet allegedly linked to Jane Street withdrew 85 million TerraUSD shortly after Terraform removed 150 million UST from Curve without public disclosure.
• Jane Street denied the allegations and said Terraform's collapse stemmed from fraud by its own management, while the administrator also linked Jump Trading to the alleged information leaks.

Binance denies firing investigators over reported $1.7 billion crypto flows to Iran

Binance denied reports that it fired internal investigators after they uncovered roughly $1.7 billion in crypto flows to Iranian-linked entities, saying no employees were dismissed for raising compliance concerns.

• Internal investigators reportedly identified more than 1,500 Iran-accessed accounts and traced significant crypto transfers, including USDT flows, to networks linked to Iran's Islamic Revolutionary Guards Corps and affiliated groups.
• The New York Times and Wall Street Journal reported that investigators were disciplined and the probe was later dismantled after presenting their findings, though Binance said its internal review found no sanctions violations tied to the transactions.
• Binance added that it has strengthened compliance and reduced direct exposure to major Iranian crypto exchanges by more than 97% since early 2024, while emphasizing that public blockchain transfers cannot be fully restricted.

Step Finance shuts down following $40 million security breach

Step Finance announced it is winding down operations after a Jan. 31 security breach drained $40 million from its treasury and fee wallets, leaving the Solana-based portfolio management platform unable to recover.

• The team said it failed to secure external financing or acquisition offers in the weeks following the exploit, forcing the dissolution of the parent company and its subsidiaries.
• The shutdown also halts new operations at SolanaFloor and affected affiliated platform Remora Markets, which said its tokenized assets remain fully backed and redeemable.
• Step Finance is now preparing a STEP token buyback for holders based on a pre-exploit snapshot, with the token's price down around 40% over the past 24 hours.

Vitalik Buterin sells over 10,000 ETH in three weeks after pledging funding for open-source projects

Vitalik Buterin has now sold 10,723 ETH for about $21.7 million in February, converting the funds into stablecoins, according to onchain analysts.

• The sales follow Buterin's late January pledge to deploy roughly $45 million of his personal ether (ETH) toward open-source software, hardware, governance, and biotech projects.
• The transactions come as ether has fallen 38% over the past 30 days and remains more than 60% below its all-time high.

In the next 24 hours

• U.S. mortgage data are due at 7 a.m. ET on Wednesday.
• U.S. President Donald Trump's State of the Union address is scheduled for 9 p.m. ET this evening. U.S. FOMC member Thomas Barkin will speak at 9:30 a.m. tomorrow.
• Plasma is among the crypto projects set for token unlocks.
• Bitcoin for Corporations concludes in Las Vegas.

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