The crypto market failed to recover significantly on Tuesday as it continued to languish in “extreme fear” territory following a sell-off on Monday that appeared to have eroded investor confidence.
Bitcoin was trading around $87,000, down from last week’s high of $92,350, as the broader market continued to show weakness despite hopes of a “Santa rally” in December.
The altcoin market didn’t look much better. Several tokens saw losses of more than 5% in the past 24 hours, led by privacy coins.
Bitcoin has now retraced almost the entire rally from November 21-28, underperforming US stocks. The Nasdaq Composite Index rose 6.6% during the same period.
Positioning of derivative products
- BTC, ETH, XRP and SOL continue to experience capital outflow from the futures market. Open interest (OI) for futures contracts linked to these tokens has decreased by up to 6% in the last 24 hours. Clearly, investor confidence is shaken due to the market decline and automatic deleveraging losses during the October 8 crash.
- BTC’s 90-day annualized basis (the spread between futures and spot prices) has collapsed to a cycle low of around 4-5%. Those of ether are around 3%-4%.
- Bitcoin’s 30-day implied volatility index, BVIV, is rising compared to Wall Street’s VIX index, a sign of increased uncertainty in the crypto market.
- The gap between the ETH and BTC 30-day implied volatility indices narrowed to 21.50, the narrowest since May 8. The downward trend indicates that more turbulence is expected within BTC.
- On Deribit, put biases remain intact in BTC and ETH options.
- Block flows exhibited a bias for diagonal put spread and calendar call strategies in BTC. In the case of ETH, traders looked for risk reversals and put spreads.
Symbolic discussion
- Altcoin market continues to lag behind bitcoin Tuesday, with ether And each sliding around 0.6% in 24 hours while BTC posted a 0.75% gain.
- Privacy Coins Taken Hardest As Zcash losses extended with a downward trend of 8%, marking a 33% decline over the past week.
- Monero and rush The results were almost as poor, with each losing between 5% and 6% as traders appeared to move away from the privacy coin boom, which now appears to have been a flash in the pan rather than a significant change in trader behavior.
- CoinMarketCap’s “altcoin season” indicator continues to stagnate at 24/100, suggesting that preference remains for bitcoin and a few select DeFi tokens where investors can generate yield despite the market decline.
- One beneficiary of this DeFi interest is SKY, formerly MKR, which rose 6.7% on Tuesday following the token buyback announcement.
- Another argument behind SKY’s rise is the increased interest in the associated USDS token, formerly DAI, whose market capitalization increased from $7.6 billion to $9.5 billion in two months.
- USDS is the native stablecoin of the Sky ecosystem. Investors can currently generate a return of 4.5% through staking.
