The cryptocurrency market experienced a downturn on Tuesday, losing early week momentum and diminishing previous gains. Bitcoin is currently trading at $90,150, a decrease from Monday’s high of $92,350. The CoinDesk 20 Index (CD20) has dropped by 2.1% in the last 24 hours, with all components declining.
This price movement reflects last week’s trend when bitcoin surged from $86,300 to $93,200 between Sunday and Tuesday, only to fall back to $88,000 later in the week.
This week, the Federal Reserve’s interest-rate decision on Wednesday adds an element of uncertainty, with the market widely anticipating a 25 basis-point cut. Such cuts are typically viewed as bullish for risk assets like cryptocurrencies since they decrease the dollar’s value.
However, the likelihood of a rate cut has been high for several weeks, suggesting that this outcome may already be factored into prices. If so, risk assets might decline following the announcement due to a lack of further bullish catalysts for the remainder of the year.
Derivatives positioning
- The market shows no indications of pre-Fed anxiety, with BTC and ETH 30-day implied volatility indexes, BVIV and EVIV, remaining stable.
- On Deribit, there is activity in the June expiry puts at strikes as low as $20,000 and calls above $200,000, likely representing bullish volatility plays rather than directional trades.
- Overall, BTC and ETH puts continue to be more expensive than calls, with block flows featuring risk reversals and put diagonal spreads for bitcoin.
- In the case of ETH, flows included call spreads and risk reversals.
- Concerning futures, most major tokens, including BTC and ETH, have seen a reduction in open interest, with BCH experiencing an 8% drop.
- Conversely, ZEC’s open interest has increased by 16% to 2.30 million ZEC, nearing the record 2.32 million ZEC from December 4.
Token talk
- The altcoin market continues to decline, with numerous tokens lagging behind bitcoin as investor interest in speculative assets hits cyclical lows.
- HYPE has decreased by 8.6% over the past 24 hours, while STRK, QNT, and KAS have fallen by 5.7% to 6.3%.
- CoinMarketCap’s “altcoin season” indicator currently sits at a cyclical low of 18/100, significantly down from 78/100 on September 20.
- Over the last 90 days, bitcoin has lost approximately 20%, but the altcoin sector is faring worse, with over half of the top 100 tokens by market cap dropping more than 40%.
- The underperforming tokens include AI-focused FET, which is struggling following a public dispute with Ocean Protocol and allegations of token sales, and , which has plummeted by 67% in 90 days due to layoffs and a lack of onchain activity.
- A few tokens have defied the bearish trend, especially privacy coins like zcash and dash , and worth mentioning are BNB and , which have remained relatively stable despite the overall market decline.
