Cryptocurrency markets experienced a brutal sell-off this week as investor concerns grew over stagnant US liquidity following US President Donald Trump's appointment of Kevin Warsh as Federal Reserve chief.
According to data from Farside Investors, Bitcoin exchange-traded funds (ETFs) recorded outflows for 3 consecutive days, with $431 million outflowing on Thursday. The price of Bitcoin (BTC) briefly fell to $60,074 on Friday before recovering to over $64,930 at 7:49 a.m. UTC.
Warsh – who previously served as Fed governor from 2006 to 2011 – is predicted to proceed the rate-cutting path. His nomination may be a signal that broader market liquidity is predicted to “stabilize quite than expand significantly,” Thomas Perfumo, an economist at crypto exchange Kraken, told Cointelegraph.
According to derivatives data platform CoinGlass, the industry recorded its Tenth-largest liquidation event on January 31, wiping out greater than $2.56 billion in leveraged positions.
Top 10 Largest Liquidation Events in Cryptocurrency History. Source: Coinglass
TRM Labs Closes $70 Million Investment Round for $1 Billion, Becoming a Crypto Unicorn
Blockchain intelligence platform TRM Labs has closed a $70 million Series C funding round valued at $1 billion, becoming the newest crypto company to attain unicorn status.
According to a press release on Wednesday, the investment round was led by seed investor Blockchain Capital, with participation from Goldman Sachs, Bessemer Venture Partners, Brevan Howard Digital, Thoma Bravo, Citi Ventures and Galaxy Ventures.
TRM Labs goals to equip private and non-private institutions with AI solutions to combat cybercrime. The company defends itself against illegal activities which can be increasingly based on automation.
“At TRM, we develop AI for problems which have real consequences for public safety, financial integrity, and national security,” wrote Esteban Castaño, co-founder and CEO of TRM Labs.
“This funding will enable our world-class team – and the individuals who will join us next – to innovate alongside institutions on the front lines of essentially the most serious threats and expand the potential of AI to significantly improve the protection of our critical systems.”
The $70 million round shows capital flowing into blockchain analytics platforms to stop the spread of AI-powered scams and cyberattacks, including from large traditional institutions.
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Avalanche tokenization peaks in Q4 as BlackRock’s BUIDL expands the chain
Blockchain network Avalanche saw increasing institutional adoption across tokenized money market funds, loans and indices within the fourth quarter, driving the worth of layer 1 real assets (RWAs) to a brand new high.
The total value of tokenized RWA locked on Avalanche rose 68.6% within the fourth quarter of 2025 and nearly 950% for the yr to greater than $1.3 billion, boosted by the $500 million BlackRock USD Institutional Digital Liquidity Fund (BUIDL) that launched in November, Messari research analyst Youssef Haidar said in a Jan. 29 report.
Fortune 500 fintech FIS partnered with Avalanche-based marketplace Intain to launch tokenized loans in November, further increasing Avalanche's TVL, Haidar said. Intain enables 2,000 U.S. banks to securitize over $6 billion in loans on Avalanche.
The S&P Dow Jones has also partnered with Dinari, a blockchain powered by Avalanche, to launch the S&P Digital Markets 50 Index, which tracks 35 crypto-related stocks and 15 crypto tokens on Avalanche.
Change in real-world Avalanche asset tokenization during the last 12 months. Source: Messari
Traditional financial firms are increasingly confident in experimenting with tokenization because the Securities and Exchange Commission has change into more open to crypto products over the past yr.
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ParaFi Capital is investing $35 million in Solana-based Jupiter
Jupiter said it has secured a $35 million strategic investment from ParaFi Capital. This is the primary time that the Solana-based on-chain trading and liquidity aggregation protocol has raised outside capital after years of accelerated growth.
The transaction involved token purchases at market prices with no discount and an prolonged lock-up period and was settled entirely in Jupiter's stablecoin JupUSD, the businesses said. Financial terms beyond the $35 million investment weren’t disclosed.
Source: Jupiter
The investment comes as Jupiter processed greater than $1 trillion in trading volume last yr and expanded beyond swap routing to perpetuals, lending and stablecoins, the corporate said.
The deal also included warrants that allowed ParaFi Capital to buy additional tokens at higher prices, a structure the businesses said was intended to reflect a long-term focus.
The investment follows a recent expansion of Jupiter's product offering. In October, Jupiter launched a beta version of its on-chain prediction market developed with Kalshi, followed in January by the launch of JupUSD, a Solana-native dollar-pegged stablecoin developed in collaboration with Ethena Labs.
According to data from CoinGecko, Jupiter’s native token (JUP) is up about 9% within the last 24 hours.
Source: CoinGecko
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Aave is closing Avara and phasing out Family Wallet as a part of DeFi realignment
Aave Labs announced that it’s abandoning its “umbrella brand” Avara to refocus on decentralized finance and simplify its branding.
Aave founder and CEO Stani Kulechov posted on Tuesday
Kulechov said the Apple iOS-based family crypto wallet would even be discontinued since the team “learned that onboarding thousands and thousands of users requires targeted experiences like savings, not generic, open wallet experiences.”
The move marks Aave's latest effort to refocus on products akin to its flagship lending protocol, because the project handed over leadership of Lens to the Mask Network last month. Kulechov said Aave's involvement within the protocol will likely be reduced to an advisory role in order that it will possibly give attention to DeFi.
Source: Stan Kulechov
Kulechov said in his last post that Aave is “now united right into a team of world-class designers, engineers and smart contract experts focused on a single mission: making DeFi accessible to everyone.”
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Step Finance treasury wallets were breached, $27 million in SOL was drained, while STEP crashed by 90%
Step Finance, a decentralized finance portfolio tracker on Solana, has disclosed a security flaw that led to the compromise of multiple treasury wallets and triggered a pointy sell-off of its native token.
“Today, several of our treasury wallets were compromised during APAC hours by a classy actor. This was an attack facilitated by a known attack vector,” the platform wrote in a post on X, adding that it had taken “remedial motion.”
On-chain data verified by blockchain security firm CertiK shows that roughly 261,854 Solana (SOL) (price roughly $27.2 million) were unstaked and transferred from wallets controlled by Step Finance.
Step Finance has not yet confirmed the entire extent of losses. The team also didn’t disclose how the attacker gained access or whether the incident was as a consequence of a sensible contract flaw, compromised keys, or an internal access issue. It also stays unclear whether user funds were affected along with the protocol's own assets.
The compromised transaction. Source: Certik
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Overview of the DeFi market
Most of the highest 100 cryptocurrencies by market capitalization ended the week within the red, based on data from Cointelegraph Markets Pro and TradingView.
The privacy-friendly Zcash token (ZEC) fell 35%, recording its biggest drop of the week in the highest 100, followed by the Story token (IP), which plunged 34% last week.
Total value locked in DeFi. Source: DefiLlama
Thank you for reading our roundup of essentially the most influential DeFi developments this week. Join us next Friday for more stories, insights and knowledge on this dynamically evolving field.
