Bitcoin Trading was little changed Wednesday after gaining yesterday as the dollar weakened. Ether gave up part of his winnings.
Instead, advances came from other parts of the altcoin market. Hyperliquid’s native HYPE token extended gains, adding 11% since midnight UTC, and liquid staking token Solana surged 32%, its biggest one-day gain since December 2023, according to CoinDesk data.
The dollar index (DXY) fell to a four-year low on Tuesday, significantly below a trend line dating back to 2011, despite an attempt by President Donald Trump to reassure markets that the dollar is “doing well” and that he is not “concerned.”
The strength or weakness of the dollar directly impacts the crypto market as the majority of assets are traded against the US currency. Inverse correlation was a key talking point during the previous bear market, when the dollar rose 22% between November 2021 and October 2022, while bitcoin lost more than 70% of its value.
Positioning of derivative products
- Another $230 million in bullish cryptocurrency futures positions were liquidated in the past 24 hours, continuing the trend of steady long positions being wiped out since Monday.
- The 30-day and one-day Bitcoin and Ether implied volatility indexes remain under pressure, a sign that traders do not expect major turbulence even as the Fed’s interest rate decision approaches.
- Notional open interest (OI) on futures contracts tied to the HYPE token jumped over 20% in dollar terms in 24 hours. This largely reflects the token’s price gains, as in token terms it remains largely unchanged, near 57 million HYPE.
- The OI in BTC, ETH, XRP and BNB increased by 2-4%.
- With the exception of ZEC and TRX, the majors’ annualized funding rates remain positive, indicating a bias toward bullish positioning.
- On Deribit, BTC and ETH puts continue to trade at a premium to calls. Activity resumed in BTC puts during the $85,000 strike, indicating demand for downside hedges.
- Block flows in BTC have been mixed, with traders looking for both put and call spreads. In the case of ETH, straddles and risk reversals were in high demand.
Symbolic discussion
- While HYPE and JTO were among the top performers on Wednesday, the biggest altcoin gain went to PIPPIN, a Solana-based memecoin and autonomous AI agent created by AI innovator Yohei Nakajima.
- PIPPIN is up 64% in the last 24 hours and is the most purchased token by “smart” investors, according to Stalkchain.
- Decentralized Exchange Tokens and aster also made upward moves, with the former rising 3.11% since midnight UTC to record a 10.9% 24-hour gain, while ASTER is trading at $0.69 after rising 5.7% since Tuesday morning.
- CoinDesk Indices also indicate altcoin strength: the bitcoin-heavy CoinDesk 20 Index (CD20) is up 2.47% in the past 24 hours and 2.38% year-to-date, while the altcoin-heavy CoinDesk 80 Index (CD80) has outperformed its peer with a 3.7% gain over 24 hours and an increase of 7.3 % since January 1.
- The upbeat mood in the altcoin sector comes as bitcoin remains stuck in a tight trading range – historically a bullish period for altcoins, as capital is often tilted toward more speculative bets until bitcoin makes a decisive move in one direction or the other.
