The crypto market is tired after relentless waves of selling pressure on Tuesday. Many assets have settled as they begin to establish support levels, although if the US dollar continues to show strength it could signal a period of prolonged decline.
Bitcoin up about 1% since midnight UTC after two days of declines that saw it drop to Lowest price since June at one point. Ether Which slid More than 20% In 48 hours – the steepest fall in three months – added 2%.
While the Coindesk 20 Index, a measure of the largest cryptocurrencies, is 2.5% lower in 24 hours, somewhat reflecting yesterday’s action: up 2.2% from midnight UTC and only one constituency, is lower.
The Altcoin market is in worse shape than Bitcoin, which continues to cling to the $99,000 support level.
Many tokens have now retraced their full rally from July, suggesting a short-lived “altcoin season” has ended with the focus returning to BTC and whether it can weather the recent storm.
Derivatives Positioning
By Sasham the other is.
- The BTC futures market reflects increased caution. Open Interest (OI) declined to $25.3 billion from $26 billion last week, suggesting traders are reducing leverage. Seen against BTC’s higher year-over-year price, the drop indicates that the relative value of market action has not kept up with the asset’s appreciation.
- The three-month annualized basis was held at 3%-4%, which signaled that the trading basis is currently untroubled. Funding rates are mixed but low in key areas (4% -9% annualized), reinforcing a lack of strong commitment of the trend and general caution in the market from the futures side.
- The bitcoin options market is showing mixed but volatile signals.
- Implied volatility (IV) is high at all expirations, pointing to elevated near-term expectations. Structurally, the term IV structure shows near-term backwardation (downward slope) before resuming a long-term contango (upward slope).
- Despite this volatility, the recent trade bias is back to Bullish, with 24-hour placing volume leaning 58%-42% in favor of calls, indicating active upside preference.
- The recent price drop was heavily influenced by leveraged losers, with $1.7 billion in liquidations in the past 24 hours split 76%-24% in favor of long positions. ETH led notional losses with $572 million liquid.
- Crucially, the average long liquidation volume over the past two days of $1 billion was significantly higher than the seven-day average of $620 million, confirming the amplified effect of forced selling on current price action.
- Ahead, a bounce could face immediate resistance, with a key price level at $102,500 holding $124 million in potential liquidation.
Token talk
By Oliver Knight
- The Altcoin market remains in oversold territory following Tuesday’s frenzied sell-off that saw many tokens fall to their monthly lows.
- The Average Crypto Relative Strength Index (RSI) is at 38/100, with tokens including OKB, Sky and FLR printing figures below 23/100. This indicates that while the overall crypto market is leaning, a short-term rally may be in the cards.
- Any suggestion of a bounce is invalid if Bitcoin and ether Break below the respective support levels at $99,000 and $3,100.
- If further downside to BTC and ETH occurs, altcoins will fare worse due to lack of liquidity and levels of foreclosure. This means that altcoin orders do not have enough buy orders to absorb the pressure and subsequent withdrawals, resulting in dramatic spikes on the downside.
- Traders will be wondering if the recent “altcoin season” is officially over with most tokens, with the exception of privacy coins, erasing their rallies from July and August.
- The privacy coin narrative remains a key driver in the current market, while DCR and ZEC cooled on Wednesday, XMR rose 7% and the entire sector remains higher over the past month.
