The cryptocurrency market has stabilized, with Bitcoin retreating to $113,100 while Ethereum remains entangled with the key support level of $4,000.
This week presents two significant macroeconomic triggers: the Federal Reserve’s interest rate decision scheduled for Wednesday and a prospective trade agreement between the U.S. and China.
The market is foreseeing a rate cut to 375-400 basis points (bps), though a steady rate at 400-425 could lead to a market sell-off triggered by a stronger dollar.
On the other side of the globe, China’s President Xi Jinping is set to convene with U.S. President Donald Trump as trade negotiations approach their final stages. A deal is expected to uplift U.S. equities and consequently, Bitcoin as it typically correlates positively with the U.S. stock market.
Derivatives Positioning
By Saksham Diwan
- The BTC futures market remains stable, with an open interest (OI) of $26.8 billion.
- Funding rates exhibit pronounced divergence: Deribit indicates a sharp uptick to 24.64% annualized, reflecting strong demand for long positions, while OKX has fallen to -3%, suggesting short positions are being compensated.
- This combination of sustained high OI and differing funding rates points to increased short-term market volatility and uncertainty, shifting away from previously consistent bullish sentiment.
- In the options market, Bitcoin displays significant bullish momentum, with the implied volatility (IV) term structure revealing a slight near-term backwardation (declining slope) before stabilizing into long-term contango (ascending slope).
- Short-term bullish sentiment has amplified notably, as indicated by the 250-delta skew at 10% for the one-week expiry, meaning traders are shelling out a considerable premium for call options. This is further corroborated by the 24-hour put-call volume, which heavily favors calls (60%).
- Coinglass reports $514 million in 24-hour liquidations, with a division of 69-31 between longs and shorts. ETH ($155 million), BTC ($114 million), and SOL ($57 million) led the charge in terms of notional liquidations.
- The Binance liquidation heatmap marks $114,350 as a pivotal liquidation point to watch in case of a price surge.
Token Talk
By Oliver Knight
- The altcoin market began to exhibit strength on Wednesday, as traders transitioned into higher-beta tokens in anticipation of policy news.
- The TRUMP token, promoted by President Donald Trump in January, spearheaded the rally as excitement mounted that the U.S. and China are nearing a trade arrangement.
- grew as well, driven by consistent activity within Base-based DeFi protocols. The token rose 7.2% achieving its highest price since the beginning of the month.
- The market continues to favor Bitcoin, as evidenced by CoinMarketCap’s “altcoin season” indicator remaining at 26/100.
- Gains among altcoins were mostly seen in memecoins and DeFi tokens, whereas larger tokens fluctuated within narrow bands.
- and Hedera (HBAR) both reversed a significant portion of their gains on Wednesday, with the former dropping 6.9% over 24 hours while Hedera saw a decrease of 4.5% despite the launch of a spot HBAR ETF on the NYSE on Tuesday.
