Bitcoin gave back much of its recent gains on Thursday, now trading at $66,700 after losing 2.4% of its value since midnight UTC.
Ether (ETH) performed even worse, falling 4.4% as the broader crypto market struggled to cope with lingering risk-aversion sentiment.
This latest fall was prompted by US President Donald Trump, who said on Wednesday evening that the war in Iran would continue with widespread strikes against Iran.
“Over the next two to three weeks, we’re going to return them to the stone age they belong to,” he said.
The comments led to an immediate rise in oil prices, with Brent crude rising about 10% to $108 a barrel as U.S. stocks diverged.
Nasdaq 100 and S&P 500 futures lost 1.5% and 1.1% respectively while the US dollar rose 0.5% above 100 points.
Positioning of derivative products
- The price of BTC has fallen more than 2% since midnight UTC, alongside an uptick in open interest on major USD and USDT-denominated futures contracts. Additionally, perpetual funding rates fell to their most negative level since March 12. This combination suggests that traders are bearish and shorting the falling market.
- In the case of ether, funding rates are the most negative since October last year, a sign of a strong bias towards bearish bets. Meanwhile, Solana’s (SOL) downtrend is surprisingly more measured despite the overnight hack.
- Zcash (ZEC) focused on privacy and experienced a notable drop in open positions (OI) in 24 hours, a sign of capital outflows.
- Nearly $400 million in futures positions were liquidated due to margin deficits. This represents a 17% increase in losses compared to the previous day.
- Despite a new tone of risk aversion, the 30-day implied volatility indices for Bitcoin and Ether remain stable within recent ranges. This reflects orderly selling in the spot market rather than a panic.
- There is little room for panic as traders are already positioned for a market collapse. They have been constantly looking for put options on Bitcoin and Ether (covering on the downside) since the beginning of the year. At the time of writing, puts on Bitcoin and Ether remained more expensive than calls on all tenors on Deribit.
- The block flows featured demand for ether straddles, volatility strategy, as well as Bitcoin put spreads and call spreads.
Symbolic discussion
- The worst performing benchmark on Thursday was CoinDesk’s DeFi Select Index (DFX), which lost 5.9% since midnight UTC, closely followed by the CoinDesk Computing Select Index (CPUS) which fell 5%.
- Ethena (ENA) led the decline, falling more than 10% on Thursday. There was also a sharp decline among DeFi tokens UNI, LDO, SKY and AAVE – all losing between 4.2% and 6.5% during Asian and European hours on Thursday.
- Algorand (ALGO) bucked the market’s downtrend, rising about 0.8% on Thursday as it continues its rich run of form after rising 22% last week.
- CoinMarketCap’s altcoin season index has fallen from 50/100 to 42/100 since March 30, highlighting the relative weakness of the sector.
