The crypto market was volatile Tuesday evening after Strategy (MSTR) President Michael Saylor said his company might sell Bitcoin. in order to pay dividends from the STRC instrument, causing a short-lived panic in the price action.
BTC, however, regained the $82,000 mark on Wednesday morning in Europe, after rising around 1.3% since midnight UTC, mainly driven by the weakening US dollar, down 0.5% over the same period.
The dollar’s weakness comes after US Secretary of State Marco Rubio said America had “achieved its military objectives” and was “not interested in further escalation, which would also lead to lower oil prices.”
Risk assets like the crypto market were poised to react well to the news, as it means the Fed could begin a cycle of rate cuts, as opposed to any hikes announced at the start of the war to fight inflation.
Ether (ETH) is trading at $2,380 after rising around 0.8%, although it remains crucially below the April 17 high of $2,460 after underperforming against Bitcoin.
Positioning of derivative products
- Positioning on Bitcoin futures remains high, with open interest near an all-time high of 800,000 BTC. Nonetheless, perpetual funding rates remain stable to slightly positive, suggesting the market is anything but overheated or crowded. This is a healthy sign that the market is being driven higher by steady demand, rather than speculative fervor.
- The same can be said for the ether market, where open interest surged to 14.5 million ETH, the highest since March 28.
- Among the top five, SOL stands out, where open interest increased by 6% in the last 24 hours to 61.79 million tokens. However, zooming out, this level still only marks a three-week high.
- Looking at the broader market, TON is seeing strong capital inflows, as evidenced by a 6% increase in open interest to 213 million tokens. Open interest reached a new high for the third day in a row. But once again, financing rates remain low and barely positive, reflecting continued hedging from cash buyers.
- The overall situation has changed from bearish to bullish in the last 24 hours. At the time of writing, the OI-adjusted cumulative volume delta (CVD) for most coins except HBAR and CC is positive. This indicates that buyers drive trading activity by placing more market orders than sellers, rather than relying on passive limit orders. This is in stark contrast to the day before, where most coins had a negative CVD.
- Bitcoin and ether’s volatility squeeze continues, with the ETH index, EVIV, falling to 55% earlier today, a level last seen on January 31. The continued decline supports the bullish action in spot prices.
- On Deribit, Bitcoin call options, or bull bets, with strike prices ranging from $82,000 to $115,000 were among the most traded contracts in the past 24 hours. However, risk reversals still show a slight overall selling bias across multiple time frames.
Symbolic discussion
- The altcoin market showed signs of strength on Wednesday with many assets posting double-digit gains. Among these were popular privacy coins zcsah (ZEC) and dash (DASH), which rose 14% and 16% respectively since midnight UTC.
- Without a clear news catalyst, it appears that investor confidence is driving the recovery after a period of consolidation between early February and early May, which led to persistent oversold conditions.
- The altcoin-dominated CoinDesk 80 Index (CD80) was the best-performing benchmark on Wednesday, up 3.5%, while the CoinDesk 20 (CD20) lagged around 1.5%.
- The memecoin rally earlier this week is now starting to cool down as capital rotates into other sectors, including components of the CoinDesk Computing Select Index (CPUS), which include Chainlink. and bittensor (TAO), which are up 3.1% and 2% respectively.
