The crypto market is weary after relentless waves of sell pressure on Tuesday. Several assets have now settled as they begin to establish levels of support, although if the U.S. dollar continues to show strength it could signal a period of prolonged downside.
Bitcoin rose about 1% since midnight UTC after two days of declines that saw it drop to the lowest price since June at one point. Ether , which slid as much as than 20% over the 48 hours — the steepest drop in three months — added 2%.
While the CoinDesk 20 Index, a measure of the biggest cryptocurrencies, is 2.5% lower over 24 hours, that pretty much reflects yesterday’s action: It’s up 2.2% since midnight UTC and only one constituent, , is lower.
The altcoin market is in worse shape than bitcoin, which continues to cling on to the $99,000 level of support.
Several tokens have now retraced their entire rallies from July, suggesting a short-lived “altcoin season” has concluded with focus moving back to BTC and whether it can weather this recent storm.
Derivatives Positioning
By Saksham Diwan
- The BTC futures market reflects rising caution. Open interest (OI) has declined to $25.3 billion from $26 billion last week, suggesting traders are reducing leverage. Seen against the higher BTC price year-over-year, the drop indicates that the relative amount of leverage in the market has not kept pace with asset appreciation.
- The three-month annualized basis is suppressed at 3%-4%, signaling that the basis trade is currently unappealing. Funding rates are mixed but low across major venues (4%-9% annualized), reinforcing a lack of strong trend commitment and overall market caution from the futures side.
- The bitcoin options market is displaying mixed but volatile signals.
- Implied volatility (IV) is high across all expiries, pointing to elevated near-term movement expectations. Structurally, the IV term structure shows near-term backwardation (downward slope) before resuming a long-term contango (upward slope).
- Despite this volatility, the recent trading bias has flipped back to bullish, with the 24-hour put-call volume leaning 58%-42% in favor of calls, indicating active upside preference.
- The recent price drop was heavily influenced by leveraged unwinds, with $1.7 billion in liquidations over the past 24 hours split 76%-24% in favor of long positions. ETH led the notional losses with $572 million liquidated.
- Crucially, the average long liquidation volume over the past two days of $1 billion is significantly higher than the seven-day average of $620 million, confirming the amplified impact of forced selling on current price action.
- Looking ahead, a bounce may face immediate resistance, with a key price level at $102,500 having $124 million in potential liquidations.
Token Talk
By Oliver Knight
- The altcoin market remains in oversold territory following Tuesday’s grueling sell-off that saw several tokens fall to their lowest in months.
- The average crypto relative strength index (RSI) is at 38/100, with tokens including OKB, SKY and FLR printing figures as low as 23/100. This suggests that while the overall crypto market is leaning bearish, a short-term relief rally may be on the cards.
- Any suggestion of a bounce would be invalidated if bitcoin and ether break below their respective levels of support at $99,000 and $3,100.
- If further downside in BTC and ETH was to occur, altcoins would fare worse due to a lack of liquidity and skewed levels of leverage. This means altcoin orderbooks simply do not have sufficient buy orders to absorb sell pressure and subsequent liquidations, resulting in dramatic spikes to the downside.
- Traders will be wondering whether the recent “altcoin season” is officially over with the majority of tokens, with the exception of privacy coins, eroding their rallies from July and August.
- The privacy coin narrative remains a key driver in the current market, while DCR and ZEC cooled off on Wednesday, XMR rose 7% and the entire sector remains significantly higher over the past month.
