What can we call a market that fails to rally consistently despite positive catalysts? Likely a weak one.
Upon closer inspection, multiple catalysts are fueling this market’s volatility.
Bitcoin (BTC) has retraced to approximately its position before Fed Chairman Jerome Powell’s dovish comments on Friday. Further losses could be anticipated if the support around $107,500 falters, according to technical charts.
Simultaneously, both spot and options market flows indicate a migration from bitcoin to ether.
“BTC dominance dropped from 60% to 57% during this rotation. While it remains above the sub-50% levels seen during the 2021 altcoin season, this shift is sparking speculation that whales expect ETH to outperform. Approval of staking ETFs for ETH later this year would further bolster this narrative,” noted QCP Capital from Singapore in their daily market update.
Derivatives Positioning
- Global futures open interest in BTC and HYPE rose by 1% and 3%, respectively, in the last 24 hours, contrasting with the outflows seen in other top 10 tokens.
- Cumulative open interest in both USD and USDT-denominated perpetual futures across major exchanges like Binance, Bybit, OKX, Deribit, and Hyperliquid remained steady on Friday, even amid the price rally. Nonetheless, it has since increased from about 260,000 BTC to 282,000 BTC, reflecting a “sell on rally” sentiment among traders.
- In contrast, the ether market saw open interest increase during Friday’s rally but retreated along with the price pullback. This trend indicates a temporary pause in bullish momentum rather than a formation of new short positions, suggesting a bullish breather rather than a bearish shift.
- Regarding funding rates, most tokens (except for ADA) maintain positive rates, signifying a net inclination for bullish long positions.
- Altcoin futures open interest surged by over $9.2 billion in just one day on Friday, bringing the combined total to a new peak of $61.7 billion. “Such swift inflows highlight how altcoins are increasingly influencing leverage, volatility, and fragility within digital asset markets,” Glassnode stated.
- On the CME, ether options open interest hit a notional record over $1 billion on Friday, following a significant number of large holders in the futures market earlier this month. Ether futures open interest surpassed 2 million ETH.
- Notional open interest in BTC options climbed to $4.85 billion, marking the highest level since April, while futures activity stayed muted.
- On Deribit, BTC options displayed a bias for puts heading into December, contrary to the post-Powell bullish sentiment observed in the market. Ether’s calls were trading at a slight premium.
Token Talk
- Hyperliquid achieved a new 24-hour spot volume all-time high of $3.4 billion, driven by soaring BTC and ETH deposits and trading via Hyperunit.
- This surge positioned Hyperliquid as the second-largest venue for spot BTC trading among both centralized and decentralized platforms, generating $1.5 billion in BTC volume alone.
- Such volume milestones enhance Hyperliquid’s attractiveness by demonstrating its capacity to manage institutional-scale order flow.
- The platform’s architecture—based on HyperCore (Layer-1 with HyperBFT consensus) and HyperEVM—offers sub-second finality, high throughput, and EVM compatibility, appealing to both high-frequency traders and DeFi developers.
- Its growing volume, particularly in BTC spot markets, strengthens Hyperliquid’s liquidity layer value proposition in DeFi, supporting its vision of being the “AWS of liquidity” driven by performance and infrastructure depth.
- Spot growth works in tandem with its dominance in perpetuals—where the platform commands 60-70% of DEX market share, yielding more on-chain revenue than even Ethereum.
- High spot volume delivers tangible advantages for HYPE holders, as the token benefits from regular buybacks funded by trading fee flows through its Assistance Fund, linking platform engagement directly to long-term token value.
Read more: Here Is Why Bitcoin’s Flash Crash May Signal Altcoin Season: Crypto Daybook Americas
