The crypto market continued to show signs of instability on Friday, along with bitcoin. trading at $67,000 in the middle of a trading range that extends into early February.
A selection of altcoins rallied during low liquidity hours in Asia, prompting ALGO and RENDER to post double-digit gains over the past 24 hours.
But the whole situation remains the same; The crypto market is trading in a macro downtrend dating back to October, characterized by a series of higher highs and lower lows.
US stocks are trading flat on Friday as volatility continues to ease following Donald Trump’s comments on Monday about a possible end to the war in Iran.
Brent crude oil is trading at $109 a barrel, indicating that the end of the war may not be as near as some analysts predict.
Positioning of derivative products
- Bitcoin and Ethereum futures markets remained subdued, with the extended holiday weekend limiting trading volumes. Open interest in both assets remained largely unchanged over the past 24 hours.
- Open interest in Solana futures surged to over 65 million SOL, its highest level since February 7. The increase, combined with negative funding rates and OI-adjusted cumulative volume delta, suggests that traders are increasingly positioning themselves to the short side, with short sellers showing greater conviction.
- Similar bearish market dynamics are present on TRX and BCH.
- The OI on privacy-focused Zcash (ZEC) futures stabilized at nearly 1.70 million ZEC for the third day in a row. ZEC’s CVD is also the highest among the majors. This combination suggests sustained positioning with strong directional conviction, likely driven by aggressive buying pressure.
- Bitcoin’s 30-day implied volatility index fell to 51.28%, the lowest since February. The market shows no signs of panic despite geopolitical concerns and energy market volatility.
- The Ether Volatility Index fell to 72.55%, the lowest since February 26.
- On Deribit, Bitcoin and Ether puts continue to trade at higher prices than calls, indicating a bias toward downside protection.
- Glassnode said dealer gamma exposure below $68,000, up to $50,000, is negative. This means that brokers could sell into a falling market to cover their exposure, thereby adding to downside volatility.
Symbolic discussion
- The altcoin market has been relatively resilient to crypto’s volatile behavior this week, with parts of the market outperforming bitcoin and crypto majors, particularly DeFi and AI tokens.
- The DeFi Select Index (DFX) is up 1.3% since midnight UTC, while the CoinDesk Computing Select Index (CPUS) is up 1.5%, beating bitcoin-rich benchmarks like the CoinDesk 20 (CD20), which rose just 0.16% on Friday.
- The outperformance of certain altcoins is symptomatic of a consolidating market. When bitcoin and the majors trade flat, traders often speculate on lower liquidity altcoins. This speculation usually stops when Bitcoin returns to decide the next major market move.
