Crypto market faces wave of selling pressure with bitcoin and ether (ETH) losing 1.1% and 1.7% respectively since midnight UTC.
The downward shift comes after bitcoin hit a monthly high of $65,500 on Wednesday, prompting some traders to take profits.
Altcoins PUMP and ZEC also declined, each falling 4.4% after Tuesday’s strong gains ended, highlighting a lack of liquidity in both directions.
US stocks also lost ground. Futures on the tech-heavy Nasdaq 100 index fell 0.25%, extending a downward trend that began 30 days ago.
A key catalyst for price action across all asset classes is the war in the Middle East, with Iran launching attacks on US military bases in neighboring Gulf states on Thursday and the US continuing its wave of airstrikes.
Positioning of derivative products
- The price of Ether has fallen 1.7% since midnight UTC, slightly more than the fall of Bitcoin. ETH’s underperformance appears to be due to the conclusion of bullish plays rather than further aggressive short selling. This is evident from the drop in open interest (OI) to 14.35 million ETH from the five-week high of 14.45 million ETH reached on Wednesday. Futures contracts linked to BTC show similar dynamics.
- Meanwhile, XRP’s OI hit a 10-day high of 2.21 billion XRP, alongside a 0.6% decline in the spot price. This combination is seen as representing a growing bias toward bearish exposure, although XRP’s positive funding rates contradict this interpretation. That said, the 24-hour cumulative volume delta (CVD) for XRP is negative, meaning short plays are executed on market orders rather than passive limit orders.
- Another notable winner of open interest is SUI, the native token of the Sui blockchain. Positions increased by 15%, although the total OI of 654 million tokens remains in line with levels seen earlier this week. The SUI token fell almost 2% over 24 hours.
- Generally speaking, most coins except BTC, ETH, and XMR have negative OI-adjusted 24-hour cumulative volume delta (CVD), a sign that bears are leading the price action.
- Bitcoin’s 30-day implied or expected volatility index is up 2% to 38%. Volatility tends to revert to the mean and, historically, values below 40% have always presaged further market turmoil.
- In options listed on Deribit, there was a notable increase in trading volume and open interest for BTC calls at $70,000 and $72,000 strikes. This likely reflects a wide bull call spread that recently broke through the band. The strategy is betting that prices will rally back to $72,000 by the end of July.
- In the case of ETH, the late July expiration at the $2,300 strike price is the most traded bet in the last 24 hours. A call represents a bullish bet on the market.
Symbolic discussion
- Artificial Intelligence Token defied the crypto’s bearish price action on Thursday, rising 3.5% since midnight as it looks to test the $2.20 resistance level, leading to a rejection and subsequent fall to $1.85 on July 2.
- The rest of the altcoin market followed bitcoin and ether, with coins like HYPE, SOL, and ENA losing 1.3% to 1.8% since midnight, while NEAR, JUP, and DASH saw larger losses.
- CoinMarketCap’s “Altcoin Season” indicator is still range-bound, currently at 48/100 after losing its level to 58/100 on Monday as investors shifted their focus back to bitcoin.
- A recent area of interest in the altcoin sphere is memecoins, notably the tokens launched on Robinhood’s new blockchain. One of them, cashcat (CASHCAT), went from relative obscurity to a market cap of $220 million in its first week of going live on Robinhood Chain. It has since fallen back to a market capitalization of $91 million, despite maintaining a daily trading volume of around $60 million.
