The cryptocurrency market experienced a downturn during the European morning, with bitcoin dropping to $91,200 after reaching a weekly peak of $94,200 on Wednesday.
This drop was isolated to the crypto space, with U.S. equities remaining relatively steady in pre-market trading, while the FTSE100 index advanced by 0.15%.
The downturn is attributed to unprecedented outflows from BlackRock’s IBIT bitcoin ETF, which saw an additional $113 million leave on Thursday as crypto bulls struggled to gain dominance over the bears.
The Fear and Greed index continues to linger at 25/100, failing to enter a neutral zone after hovering below 40/100 for over a month.
Derivatives positioning
- The BTC futures market reflects ongoing caution and significant deleveraging. Open Interest (OI) has shrunk to $21 billion from $25 billion a month ago, indicating reduced trader leverage and risk exposure.
- This trend of deleveraging coincides with persistently low derivative market metrics: The three-month annualized basis remains stable at 4%-5%, while funding rates hold steady at 5%-6% across major platforms, with no notable changes in the past month.
- BTC options maintain a bullish sentiment despite declining volatility. The implied volatility (IV) term structure for the short term has decreased, transitioning away from backwardation towards a more conventional contango, suggesting reduced expectations for immediate, extreme price fluctuations.
- Nonetheless, the volume skew remains optimistic, with 24-hour put/call volume at 57% in favor of calls. Importantly, the one-week 25-delta skew has recently risen to 8%, indicating that traders are still paying a premium for short-term upside exposure.
- Recent BTC price volatility resulted in $280 million in liquidations over 24 hours, with $200 million linked to long positions. ETH ($88 million) and BTC ($85 million) were the frontrunners in total liquidations.
- The BTC/USDT liquidation heatmap on Binance indicates substantial long liquidations around $90,600, per Coinglass data. This is a critical level to monitor in the event of a price drop.
Token talk
- The altcoin market fared similarly poorly in the last 24 hours, with TAO, HYPE, and NEAR all shedding over 6.5% of their value.
- However, the significant development was seen with ether price movement. Just a day after its well-anticipated Fusaka upgrade, ETH retraced significant early gains, declining by 2.62% since reaching the day’s peak at 03:00 UTC.
- This subdued ETH price activity provides insight into the broader altcoin market, where even optimistic catalysts seem to be ignored.
- The CoinDesk 20 (CD20) index reflected ETH’s downturn, while CDMEME, CoinDesk’s memecoin index, dropped 5.8% in the past 24 hours.
- CoinMarketCap’s “Altcoin Season” indicator remains stagnant at 21/100, seemingly mired in a bearish territory as traders show a preference for the stability of bitcoin and security of stablecoins.
- Two exceptions to Friday’s decline: privacy cryptocurrency zcash and TRX, the native cryptocurrency of the Tron blockchain, which gained 4.7% and 1.8%, respectively.
- In the case of ZEC, it is recovering from a corrective phase where it was deemed “oversold” on the relative strength index (RSI). TRX, on the other hand, appears to be making strides on its own, achieving gains across daily, weekly, and monthly metrics.
