Bitcoin and the broader crypto market succumbed to a wave of selling pressure during the Asian session, causing a decline to around $91,530 at 10:00 UTC, from a local high of around $93,750 at midnight.
The selloff followed a failed attempt to surpass $94,500 on Tuesday, the third in the last five weeks.
The altcoin market is faring worse than bitcoin, with PENGU and XRP the hardest hit with declines of 6.5% and 3.5% since midnight.
Bitcoin is now trading firmly within the December range, which saw several peaks between $85,000 and $94,500, although it extended the decline that began in October.
Wednesday’s decline reflects an increase in risk aversion among traders. US stocks also fell in pre-market trading, with Nadsaq 100 futures trading down 0.32% since midnight.
Positioning of derivative products
- Exchanges liquidated crypto futures bets worth $465 million in the past 24 hours, with long positions accounting for more than 50% of the total. This is in stark contrast to the past two batter days, when shorts faced the height of selloffs.
- Nonetheless, cumulative open interest (OI) across globally listed crypto futures remains stable above $143 billion, the highest in almost two months, with moderately positive funding rates indicating bullish positioning.
- The OI in XRP, DOGE, SUI and ZEC fell by 5-6%. This is likely linked to profit-taking following the recent surge in prices of these tokens.
- CME’s BTC futures are showing signs of green shoots, with OI increasing from 100,000 BTC to 111,000 BTC since December 30. Nonetheless, overall positioning remains light compared to a year ago, when OI was above 191,000 BTC.
- On Deribit, the biases for BTC and ETH continue to weaken, although the uptrend has not yet emerged.
- BTC block flows show a mixed profile, with strangles suggesting a bullish volatility bias and call spreads indicating bullish price expectations. In the case of ETH, straddle, also a volatility strategy, was the most preferred play.
Symbolic discussion
- Memecoins and Privacy Coins were the two worst performing sectors on Wednesday, along with zcash leading the privacy crisis, down 4.5% since midnight UTC.
- CoinDesk’s Memecoin Index (CDMEME) fell 1.5%, about twice as much as the CoinDesk 5 Index, which measures the price of BTC, ETH, XRP, SOL and ADA.
- A bright spot for the altcoin market is the decentralized finance (DeFi) sector, with total value locked (TVL) across the ecosystem up 0.17% over the past 24 hours despite declining assets, suggesting positive inflows, according to DefiLlama.
- CoinMarketCap’s “altcoin season” indicator is at 25/100, down slightly from last week’s high of 27, but considerably above the December low of 14, suggesting signs of optimism in the altcoin market.
- An outlier from the downward movement was which remains in the black since midnight to add to a 1.2% gain over the past 24 hours.
