The crypto market succumbed to a wave of selling pressure and liquidations on Thursday, along with bitcoin. falling to around $61,300 at 02:00 UTC before climbing back up to $64,680. It recently traded around $62,500.
Ether (ETH) has lost 3% since midnight UTC, now trading at around $1,750. Several other altcoins saw larger declines, with NEAR, ZEC and JUP all losing more than 13%.
This downward move sparked a wave of liquidations, with futures positions worth $1.7 billion forced to close due to the fall, of which $750 million can be attributed to bitcoin and $390 million to ether.
Investors appear to be abandoning crypto to pursue the AI narrative in traditional markets, exacerbating geopolitical uncertainty and a fundamentally broken market structure that has failed to recover from October’s leverage wipe.
Positioning of derivative products
- Total 24-hour futures volume rose 2.9% to $305 billion, an increase that reflects high activity but no panic. More telling is open interest, which fell 8.5% to $111.4 billion, a sign that leveraged positions are being unwound rather than new bets being added.
- The liquidations have been severe: around $3 billion in leveraged positions have been wiped out over the past two days, with the 24-hour total alone reaching $1.7 billion.
- Bitcoin open interest returned to 766,000 BTC from yesterday’s record highs above 800,000 BTC. The drop suggests that the price drop has eliminated a significant portion of leveraged long positions and that bears are not aggressively building new directional bets, at least not on BTC. The same dynamic applies to ether (ETH) and XRP.
- Solana is a notable exception. Open interest for SOL reached an all-time high of 72.16 million tokens even as prices fell, a combination that typically signals an influx of short positions. This sentiment is understandable given that SOL fell below its February low while BTC, ETH, and XRP held above theirs.
- TRX and ADA are also seeing open interest increase as their prices fall, suggesting similar short-term accumulation in these markets.
- The broader tone of derivatives confirms the bearish trend. The 24-hour cumulative volume delta for the top 20 tokens is negative, meaning traders are selling at market prices rather than limit orders. This active and aggressive bearish participation suggests the potential for greater losses.
- Implied volatility increases at the same time. Volmex’s 30-day implied volatility indexes for bitcoin (BVIV) and ether (EVIV) have surged over the past three sessions, reflecting growing demand for options-based hedging and heightened expectations of continued price swings.
- Sell biases have strengthened in both bitcoin and ether, signaling that investors are willing to pay a premium to protect against downsides. The $60,000 strike imposed on Deribit involves over $1 billion in notional open interest. As spot prices approach this threshold, significant position adjustments become increasingly likely, which could amplify volatility.
- The $55,000 put was the most actively traded options contract in the past 24 hours. The message from derivatives markets is unambiguous: sentiment is bearish.
Symbolic discussion
- The altcoin market underperformed the crypto majors on Thursday. Even recent darling HYPE lost 12% after hitting an all-time high earlier this week.
- DASH, ENA, and FET have also fallen more than 10% since midnight UTC as the lack of liquidity in altcoin pairs has once again surfaced.
- Market depth is generally much lower on altcoin pairs than on bitcoin or ether, so the amount of capital needed to move prices in one direction or the other is relatively small. Add in a wave of liquidations and the asset simply cannot maintain the supply level, causing exaggerated price movements to the downside.
- Monero (XMR), although down 4% since midnight, is still in the black for 24 hours. Trading at $347, it appears unfazed by the broader stock market crash.
- Much of the altcoin’s trajectory will depend on bitcoin’s ability to surpass $60,000. A break below could trigger further selloffs, further weighing on illiquid altcoin pairs.
