Crypto Panic Eases as Huobi Founder Rejects Liquidation Rumors

Crypto market jitters eased on 2026-02-08 after Huobi founder Li Lin denied rumors of forced liquidation of firm assets. The move came amid sharp declines in Bitcoin and Ethereum that had raised concerns among investors globally according to reports.

Trend Research, a major Ethereum holder, was reported to have sold approximately 658,000 ETH in eight days, totaling $1.34 billion. The average selling price was $2,055, significantly below the firm's average cost of $3,104 per ETH. This move led to an estimated $688 million in losses.

Avenir Group, associated with Huobi, confirmed it held no reduced Bitcoin or Ethereum positions during the recent market decline. The statement helped dispel fears of a larger collapse within the institutional crypto space. On-chain records also verified that Trend Research's last ETH holdings were transferred to Binance.

Why Did This Happen?

The initial panic stemmed from reports of a Hong Kong fund's potential collapse and unverified claims of forced liquidation. These rumors intensified as Ethereum prices fell nearly 30% in a week. However, Li Lin's denial clarified that no major institutional reductions occurred, reducing market anxiety.

Trend Research's sell-off was also tied to deleveraging strategies amid falling prices. The firm's leveraged position on Aave had exposed it to liquidation risks at around $1,800 per ETH. Jack Yi, Trend Research founder, admitted to an early bullish stance that proved premature.

How Did Markets React?

Bitcoin and Ethereum volatility subsided after the clarification. Binance confirmed receipt of the final ETH transfers, reinforcing transparency and credibility in the market. This helped restore investor confidence, particularly among institutional players.

Despite the large sell-off, on-chain data showed that smart money traders and whales were accumulating ETH during the downturn. Over $38 million in spot ETH was acquired in the past week, with some OTC purchases exceeding $76 million.

What Are Analysts Watching Next?

Market observers are focusing on Ethereum's stability and the likelihood of further large-scale liquidations. BitMine, another major Ethereum holder, faces $7 billion in unrealized losses, raising concerns about broader market resilience.

Analysts are also monitoring Japan's crypto regulatory developments and the political implications of a potential Trump-linked crypto probe in the U.S. Both could introduce additional volatility to the sector. Meanwhile, FPIs in India are showing renewed interest in equities, driven by improved global risk sentiment and a U.S. trade deal.

With over $1.2 billion in realized losses reported in 24 hours, the market remains cautious. However, the transparency of on-chain data and institutional clarification are seen as key tools in maintaining stability during sharp price movements.