Bitcoin even if he’s slightly in the green, he might be in shock. The largest cryptocurrency has gained less than 0.5% since midnight UTC, and strong moves toward $80,000 are likely to face opposition.
This is because short-term holders have a cost basis around that price, Luke Deans, senior research associate at Bitwise, told CoinDesk. A move above could convince them to take profits and sell, thus capping any advance.
Another headwind could come in the form of US PCE inflation in March, which will manifest as oil prices keep pressure on risk assets. West Texas Intermediate crude climbed as high as $110, and reduced traffic through the Strait of Hormuz kept energy markets fragile.
The Federal Reserve’s decision to keep the federal funds rate stable on Wednesday also weighs on the market. Specifically, four dissenting votes, the most since 1992, with one governor pushing for a reduction and three regional presidents opposing the statement’s suggestion that the Fed resume easing.
Deans also said altcoins remain tied to bitcoin, with 180-day correlation and beta percentiles near 97% and 99%. This means that tokens today can scale like leveraged Bitcoin transactions.
“Beneath the surface, conditions typically associated with increasing volatility appear to be forming,” Deans said. “Liquidity remains subdued, with profit-taking and losses largely offsetting each other, reflecting a lack of directional conviction.”
In these environments, he said, price movements are often necessary to unlock new liquidity.
Positioning of derivative products
- Market-wide, open interest (OI) futures fell more than 2% to $119 billion in 24 hours. Trading volumes, however, increased by 26% to $208 billion. This combination indicates that positions are closed and capital is fleeing the market, a sign of risk aversion.
- More than $500 million in leveraged bets have been liquidated by exchanges, most of which are long or bullish positions. Market weakness amid rising bond yields clearly caught the bulls off guard.
- OI fell 2% on Bitcoin futures and 1.7% on ether. Similar declines are seen across most majors, with the exception of DOGE, whose OI is still hovering at its six-month high.
- With the exception of XMR, In short, sellers are becoming more aggressive, which suggests a greater potential drop in prices.
- Bitcoin’s 30-day implied volatility index, BVIV, fell to 41%, extending the decline from February’s high of 97%. Currently, the index is at its lowest level since January 29. Once again, this reflects a market that has become desensitized to adverse macroeconomic developments such as rising bond yields and rising oil prices. The Ether Volatility Index shows a similar trend.
- On Deribit, BTC and ETH protective puts remain more expensive than calls. The high concentration of open interest in Bitcoin’s $80,000 call option created long (positive) gamma momentum, suggesting that market makers could sell rallies at this level and above to cover their books. This could slow down any increases.
- Bitcoin’s options term structure shows less short-term stress, with traders pricing in more uncertainty in the longer term rather than the immediate future.
- Block flows featured a wide BTC sell spread involving strikes of $72,000 and $65,000, according to Amberdata. The strategy shows expectations for a further price decline to $65,000 or lower.
Symbolic discussion
- Memecoin launchpad Pump.fun adds a way for creators to send fees to charity as its PUMP token trades lower following a major change in its earnings policy.
- The feature, called Charity Coins, allows coin administrators to choose a verified charity in Pump.fun’s creator fee settings. The platform that operates it, Donate.gg, supports more than 10,000 charities.
- The goal is to reduce conflicts between traders and coin administrators when a token forms around a charitable cause. The platform’s current top fundraiser currently stands at $12,800 for St. Jude Children’s Research Hospital.
- Pump.fun also said it would stop using all its earnings to buy and burn PUMP. Instead, it will now dedicate 50% of its future net revenue to automatic buyouts and burns for one year, while keeping the rest for hiring, product work, marketing and possible deals.
- The changes come during a difficult time for PUMP. The token is down more than 7% in the past 24 hours, compared to a 2.2% decline in the broader CoinDesk 20 Index (CD20).
