The crypto market succumbed to selling pressure on Tuesday, with bitcoin and ether returning from relative safety in an area that could see the two largest cryptocurrencies by market value challenge multi-month lows.
BTC is trading at $107,800 while ETH is at $3,867 after rebounding over the weekend then giving back its gains on Tuesday.
Analysts will now assess whether the crypto market has formed a “lower” trend and will continue to decline. The next sign would be for bitcoin to fall below the October 17 low of $103,700.
Positioning of derivative products
- The Bitcoin futures market is showing a measured recovery, with open interest increasing to $26.06 billion as traders gradually re-engage.
- The three-month annualized basis remains stable in the neutral to bullish range of 5-6%. Importantly, funding rates have returned to essentially neutral or positive levels, indicating that the short-term conviction previously observed has dissipated. OKX is currently leading this development with a high positive rate of 7.51%.
- The BTC options market is strongly bullish, supported by growing expectations of future price fluctuations. The term structure of implied volatility is ascending, indicating that the market expects volatility to increase over time.
- At the same time, the delta skew of 25 increases over all periods and now exceeds 11.86%. This high positive bias confirms that traders are paying a significant premium for upside exposure – calls – reflecting significant conviction for a sustained rally, despite the near-neutral 24-hour put-call volume, which is 49% to 51% in favor of puts.
- Data from Coinglass shows $320 million in liquidations over 24 hours, with a 76% to 24% split between long and short positions. BTC ($88 million), ETH ($85 million) and others ($33 million) were the leaders in terms of notional liquidations.
- Binance’s liquidation heatmap shows $112,300 as the base liquidation level to watch, in case of a price rally.
Symbolic discussion
By Olivier Knight
- South Korean exchanges Upbit and Bithumb listed a number of low-market-cap tokens on Tuesday, sparking a series of explosive moves higher.
- Upbit notably added with won and dollar trading pairs. SynFutures is a decentralized derivatives exchange that hopes to rival HyperLiquid and Aster.
- F soared more than 50% post-listing before giving back some of the gains. Trading volume increased by 669% to over $200 million.
- Bithumb, on the other hand, has listed ZORA and RECALL. The former increased by more than 10%, while RECALL moved in line with the broader market.
- Post-quotation increases bucked the altcoin market trend on Tuesday, with several assets facing double-digit downward moves. The CoinDesk 80 Index fell 4.5% in the past 24 hours.
- CAKE and ETHFI both lost 10%, while ETH, BNB, and SOL all fell 4-5% as negative sentiment returned to the market.
- Traders are currently analyzing whether the market’s rebound over the weekend has formed a lower low, indicating a downtrend and a potential reversal of the bear market after new record highs less than a month ago.
