[Weekly Brief] Jan 2026 - W5: Market Turbulence & Stress Test

"Volatility is the price of admission."

This week, Bitcoin suffered a severe crash (-7.63%), triggering a violent spike in volatility. As panic selling hit the market, Implied Volatility (IV) skyrocketed, causing a temporary but significant expansion in market premiums.

Consequently, our portfolio faced a sharp Mark-to-Market (Unrealized) Drawdown. While the realized PnL remains actively managed, the valuation of open positions has dropped due to the inflated premiums. We view this as a structural stress test—one that our system is designed to endure.

Performance Summary

• Period: Jan 24, 2026 (Sat) ~ Jan 30, 2026 (Fri)
• Duration: 7 Days
• OKX Return (Left): -9.51%
• Bybit Return (Right): -6.51%
• Total Portfolio Return: -8.89% (vs BTC -7.63%)
• Weekly Alpha (vs BTC spot): -1.26%
• Cumulative Duration: 63 Days (Since Nov 29, 2025)
• Cumulative Return: +0.78% (vs BTC -10.21%)
• Cumulative Alpha: +10.99% (vs BTC spot)

Alpha Analysis

• Drawdown Context: The portfolio experienced a "Double Whammy" scenario: Spot prices crashed while Volatility spiked. This caused the market premiums to inflate temporarily, resulting in a considerable unrealized loss on the balance sheet.
• System Resilience: Despite the valuation drop, the system maintained algorithmic discipline. Instead of panic closing, we are managing the Delta risk dynamically. The current valuation reflects a temporary premium expansion that we aim to recapture as volatility normalizes.

Market Context: "The Return of Fear"

• Spot-Vol Correlation (-0.86): The correlation has plunged deep into negative territory. This is a classic "Risk-Off" signal, where falling prices drive immediate panic (high volatility).
• Implication: The market is currently driven by fear. However, historically, such extreme negative correlations are often short-lived. We anticipate a Mean Reversion in volatility, which will be the primary driver for our valuation recovery.

The Process

• Capital Efficiency (DeFi Integration): While defending our CEX positions, we continued to optimize our capital structure. We effectively utilized DeFi (Uniswap V3) to deploy idle collateral into On-chain Market Making.
• Strategic Value: This allows us to generate an uncorrelated yield stream (Swap Fees) that works independently of the CEX volatility crunch, enhancing the overall robustness of the portfolio even during downtrends.

About the Report

1. Philosophy: Gauss Technology does not rely on directional prediction or speculation. We focus strictly on monetizing market inefficiencies and structural volatility.
2. Instruments: BTC spot, perpetual, and options on Major Crypto Exchanges (OKX, Bybit).
3. Data Standards: All performance metrics represent Net Realized PnL, calculated after deducting all fees and slippage. The PnL charts displayed are actual screenshots taken directly from the exchange apps. Please note the time basis for daily snapshots varies by exchange: OKX data is recorded at UTC 08:00, and Bybit data at UTC 00:00.
   1. Note: Bybit's display of 'BTC Change %' typically lags or shows discrepancies compared to the global index. We recommend referencing OKX price data or standard market indices for accurate spot performance.
4. Membership: This public report displays percentage returns only. Absolute pnl ($) and detailed execution analysis will be available exclusively in the upcoming Partner Tier.
5. Evolution with AI: Decisions are driven by Human-AI collaboration. Therefore, as AI advance, Gauss Technology’s capabilities grow stronger.
6. Disclaimer: This report is for informational purposes only and does not constitute financial advice. Past performance is not indicative of future results.