Bitcoin recovered after falling to $86,000 on Sunday, its lowest point in more than a month.
The rebound occurred alongside the opening of Bitcoin futures trading on the CME at 23:00 UTC. The largest cryptocurrency rose more than 2% over the next nine hours before losing strength to $88,250.
Zooming out, Bitcoin remains in a grueling downtrend characterized by a series of lower highs and lower lows that began in October to create the traces of an early bear market reversal.
Sunday’s selloff was spurred by investors’ continued risk aversion after a volatile week in which U.S. President Donald Trump made several speeches in Davos on Greenland, tariffs and geopolitical conflicts around the world.
This sentiment has driven precious metals gold and silver to record highs, diminishing bitcoin’s reputation as a safe-haven asset and cementing it as a risk-on asset that, for the most part, moves in tandem with U.S. stocks.
Positioning of derivative products
By Saksham Diwan
- BTC futures open interest (OI) stabilized at $22.6 billion despite downward price volatility, signaling a pause in recent deleveraging.
- While funding rates have neutralized around 5% annualized on most exchanges, OKX has diverged with a rate of -3.8%, reflecting localized hedging or bearish bets.
- In contrast, Binance and Deribit’s 3-month annualized basis increased slightly to just over 5%, suggesting that while speculative froth has reset, institutional appetite is beginning to firm up during this consolidation.
- BTC options are reporting strong conviction with a 15% one-week bias on 25 deltas and 58% call dominance on 24-hour volume.
- The term structure of implied volatility (IV) has shifted from carryover to backwardation, with short-term rates higher than longer-term ones.
- Initial volatility reached 41.53% (January 30) from the median decline of around 39% before rising to 47% at the end of 2026.
- This structure highlights a significant premium for short-term positioning as the market prepares for immediate price action while maintaining a bullish long-term outlook.
- Data from Coinglass shows $744 million in liquidations over 24 hours, with a 77-23 split between long and short positions. ETH ($273 million), BTC ($207 million), and SOL ($63 million) were the leaders in terms of notional liquidations. The Binance liquidation heatmap shows $88,370 as the base liquidation level to watch, in case of a price decline.
Symbolic discussion
By Olivier Knight
- While bitcoin continues to show weakness, the altcoin market showed some resilience overnight.
- Ether and xrp both are up 2.8% since midnight UTC while zcash privacy coins and monero gained 6% and 3% respectively.
- The best performing corner of the altcoin market was metaverse tokens, with axie infinity (AXS) up over 23% while the CoinDesk Metaverse Select Index (MTVS) rose 6.92% since midnight to add to a 34.4% year-to-date rally.
- The Bitcoin-dominated CoinDesk 20 Index (CD20) has lost 0.52% year to date, while altcoin heavy CoinDesk 80 (CD80) is in the black after rising 2.5%, demonstrating the relative strength of altcoins.
- RIVER, the native token of its namesake’s stablecoin protocol, was the most prolific altcoin over the 30 days, rising over 2,100% after rising an additional 34% over the past 24 hours.
- The “altcoin season” indicator is currently at 28/100, still well below September’s high of 76/100, but significantly higher than the same period last month, when it was 16/100.
- A lack of liquidity and market depth since October’s $19 billion liquidation cascade means altcoin moves have been more exaggerated in both directions, leading to a high number of liquidations during sell-offs like Sunday as well as dramatic rallies as traders navigate tight order books.
