Crypto market strength extended through Tuesday, with bitcoin gaining 3.9% since midnight UTC to trade at $71,000 while ether (ETH) is back above $2,000, a level it has recently struggled to surpass.
Crypto was not alone in its rise. US stocks and precious metals so too after US President Donald Trump said the war in Iran would end “very soon”. The dollar and oil gave back much of their gains from last week.
The Dollar Index (DXY) briefly reached 99.7 on Monday and now sits at 98.5. The crypto market is inversely correlated to the dollar, so a Bitcoin breakout could be on the cards if the DXY continues to weaken during the rest of the week.
The war in Iran – which it appears may now be shorter than many thought – has highlighted a resilience in the crypto market that was previously absent. Bitcoin has beaten stocks and precious metals since the conflict began, potentially rebuilding the asset class’s reputation as a safe-haven investment.
But he’s not out of the woods yet. Bitcoin and the market as a whole remain in a clear downtrend since early October, characterized by a series of lower highs and lower lows. In order to break this trend, Bitcoin must rally back up to $98,000 after establishing support levels along the way.
Positioning of derivative products
- Open interest (OI) on futures linked to HYPE, the best-performing token over the past 24 hours, increased 14% to $1.41 billion, according to Coinglass. OI has surpassed 40 million HYPE, a level that remains close to recent lows.
- For BTC and ETH, open interest increased by over 5%, outpacing spot price gains. This shows further capital inflows as markets recover.
- In the case of gold tether (XAUT), OI futures continue to decline and have fallen below 110,000 XAUT, a sign that investors are diverting money from recent outperformers like gold-linked assets.
- Annualized perpetual funding rates for most tokens remain slightly positive, suggesting narrow dominance of bullish bets. Tokens such as ZEC and SUI stand out with negative rates.
- Most major cryptocurrencies, with the exception of BCH, XMR, and XAUT, saw aggressive bidding, as evidenced by their OI-adjusted cumulative volume deltas.
- BTC and ETH’s 30-day implied volatility indexes, BVIV and EVIV, fell more than 4%, a sign that traders are pricing in uncertainty following oil’s return below $100.
- Nonetheless, on Deribit, protective BTC and ETH puts remain more expensive than bullish calls across all time frames. The positioning of market makers is such that volatility could increase significantly in the event of a potential rise in the price of BTC above $75,000.
- Block flows included a demand for BTC straddles, a bet on volatility and call spreads, a bullish strategy. In the case of ETH, traders looked for risk reversals.
Symbolic discussion
- The altcoin market was particularly buoyant on Tuesday, with the Solana-based DEX token Jupiter (JUP) posting a double-digit gain since midnight UTC.
- Recovery token ETHFI also gained, rising 6.5% to its highest level since January 29.
- HYPE, the native token of derivatives exchange HyperLiquid, has been more subdued, rising just 0.5% since midnight. This is despite BitMEX founder Arthur Hayes calling for a record high of $150 in a blog post on Monday. HYPE is now trading at $34.8, with much of its 24-hour gains coming early Monday, before Trump’s comments on the war.
- The best performing CoinDesk benchmark over the past 24 hours was the bitcoin- and ether-heavy CoinDesk 5 (CD5) and CoinDesk 10 (CD10), both up 4.3%, while the DeFi Select Index (DFX) was close behind after rising 4%.
- The same cannot be said for the memecoin index (CDMEME), which sits at the bottom of the pack after rising just 2.6%.
