The crypto market showed signs of resilience on Thursday, with bitcoin adding 1.1% since midnight UTC after falling below $60,000 on Wednesday to hit its lowest level since October 2024.
The largest cryptocurrency remains at a critical level in terms of its broader market structure. A possible downward breakout in the price could trigger a decline to around $52,000. For now, it seems to have weathered the storm.
Ether (ETH) rose 1.5% on Thursday and was recently trading at $1,644 after briefly dropping to $1,550 around 5:00 p.m. UTC on Wednesday.
Thursday’s gains may possibly be linked to a rally in U.S. stocks. S&P 500 and Nasdaq 100 futures are up 0.7% and 2.2%, respectively.
Positioning of derivative products
- BTC revisited a low near $59,000 on Wednesday and has since rebounded to over $61,000.
- Two-way volatility has proven costly for leveraged futures bets across the market. Centralized exchanges liquidated nearly $1 billion in cryptocurrency futures positions in 24 hours, with long positions accounting for the largest portion.
- Still, Bitcoin futures open interest (OI) surged to 763,000 BTC, the highest since June 4, ending a period of stability around 730,000 BTC. In other words, falling prices triggered an influx of money, but not necessarily on the bullish side. In fact, annualized funding rates have turned negative, a sign that traders are paying a premium for downside exposure.
- The ether futures market has not seen a notable increase in OI and funding rates remain slightly positive.
- SOL’s OI remains near Wednesday’s record high, alongside largely neutral funding rates that indicate balanced market positioning. The same goes for XRP, whose OI is reaching its highest levels since October.
- The OI-normalized 24-hour cumulative volume delta for most coins, including BTC, is negative for the third day in a row. This is a sign that bears are leading the price action by shorting at market prices rather than using passive limit orders.
- BVIV, which measures BTC’s 30-day implied volatility, is back to 46%, a high of 51%. This drop in the so-called “fear gauge,” representing demand for options, supports the cryptocurrency’s overnight rebound. The same goes for the ether implied volatility index, EVIV.
- Nonetheless, ether is considered more volatile than BTC, with implied volatilities 10 points or more richer than those of bitcoin across all time periods.
- Options biases for the two largest cryptocurrencies indicate downside concerns that are both persistent and growing. For example, BTC’s one-week skew shows a volatility premium of almost 25 points for puts. This also means that upside bets are currently cheap and could spark strong demand if Thursday’s US Core PCE for May reveals slowing inflation.
Symbolic discussion
- The altcoin market recorded an exaggerated rebound on Thursday following Wednesday’s losses, reflecting a low liquidity environment.
- Jupiter (JUP) fell more than 12% in six hours on Wednesday before rebounding more than 18%, selling off futures traders in both directions.
- Data from Coinglass shows that $1 billion in futures positions were liquidated in the past 24 hours, with $585 million attributed to altcoin trading pairs.
- Decentralized finance (DeFi) tokens AAVE and ETHFI also performed well on Thursday, up 2.5% and 4.7%, respectively, since midnight.
- AI tokens, meanwhile, have struggled to recover. RENDER and NEAR recorded losses between 0.8% and 1.9% despite a rebound in other crypto sectors.
- Layer 1 network token Solana (SOL) fell to $64 on Wednesday, completing a 75% decline since September. A break below the June 6 low of $60 would mark its lowest point since December 2023.
