Crypto markets opened the week under pressure, extending losses after a volatile weekend as bitcoin showed tentative signs of stabilizing below $70,000.
Even though the largest cryptocurrency has fallen more than 2.8% in the past 24 hours, it remains well below its recent low of around $60,000. Still, it has struggled to regain momentum after last week’s sharp decline that reignited debate over whether the market has entered a deeper bearish phase or is nearing a bottom.
Bitcoin bulls pointed to slowing downward moves as a sign of exhaustion, even as critics took victory laps. Still, the focus is on software stocks, some of which have started to rebound on fears of a deeper collapse.
The CoinDesk 5 Index (CD5) fell 3.4%, with the five largest cryptocurrencies falling. Ether fell about 5%, underperforming bitcoin as traders de-risked major tokens, but held above psychological support at $2,000. The broader CoinDesk 20 Index (CD20) is down 3.7%.
Positioning of derivative products
- BTC futures are seeing a sharp bearish shift after open interest (OI) slipped from $19 billion to $16 billion over the past week, marking a period of sustained deleveraging.
- Funding rates on Bybit (-2.24%) and Binance (-0.5%) have moved from neutral to negative, signaling that short sellers are now leading the talk. With a three-month base compressed to 3%, institutional demand has cooled, reflecting a broader derivatives landscape dominated by risk-averse sentiment.
- Options data supports this defensive shift, with BTC’s one-week delta bias of 25 reaching 20% and call dominance dropping to 48%.
- The term structure of implied volatility (IV) is now in extreme backwardation, with an initial volatility of 85.03% eclipsing long-term expectations (~50%). This is a considerable premium for immediate protection against short-term price declines.
- Coinglass data shows $397 million in liquidations over 24 hours, with a 45-55 split between long and short positions. BTC ($234 million), ETH ($74 million), and SOL ($14 million) were the leaders in terms of notional liquidations.
- Binance’s liquidation heatmap shows $68,160 as the base liquidation level to watch for in the event of a price decline.
Symbolic discussion
- Crypto wallet Rainbow launched its RNBW token last week, but the launch was not smooth.
- The Ethereum-based project introduced the token on the basis of the Layer 2 network, with the price dropping to $0.025, a 75% drop from its initial coin offering (ICO) of $0.10 just two months earlier. It has since risen to $0.031
- This drop dashed the expectations of speculators betting on a fully diluted valuation (FDV) of $100 million. On Polymarket, the odds of this bet reached almost 80% earlier in the year. The FDV is now closer to $31 million.
- At the heart of the chaos were delays in distributing tokens to early buyers and participants in Rainbow’s on-chain rewards program. Some users reported that they did not receive their airdropped tokens within hours of the launch.
- Rainbow co-founder Mike Demarais blamed back-end infrastructure that collapsed under demand. US-based investors will not be able to fully access their tokens until December 2026, depending on the vesting terms.
- Rainbow raised $18 million in a 2022 Series A round led by Reddit co-founder Alexis Ohanian’s company Seven Seven Six. The wallet is known for its gamified features and its points system linked to the RNBW token.
