The crypto market is consolidating, with bitcoin falling to $113,100 and ether continues to struggle with the $4,000 level of psychological support.
From a macro perspective, there are two key catalysts this week: the Federal Reserve’s interest rate decision expected later Wednesday and a possible U.S.-China trade deal.
The market expects rates to fall between 375 and 400 basis points (bps), although it should be noted that if the Fed keeps rates steady between 400 and 425, the market will likely sell off due to a rally in the dollar.
Meanwhile, in the Far East, Chinese President Xi Jinping will meet US President Donald Trump as a deal nears completion. A deal is likely to boost U.S. stocks and, by proxy, bitcoin, as the largest cryptocurrency is positively correlated with the U.S. stock market.
Positioning of derivative products
By Saksham Diwan
- The BTC futures market remains stable, with open interest (OI) at $26.8 billion.
- Funding rates are widely divergent, however: Deribit is up aggressively at 24.64% annualized, signaling strong demand for long positions, while OKX has fallen to -3%, where short positions are paid out.
- This mix of high OI and polarized funding rates indicates high near-term market volatility and uncertainty, disrupting previously uniform bullish sentiment.
- In the options market, Bitcoin is showing a strong surge in bullish conviction. The term structure of implied volatility (IV) displays a slight short-term backwardation (downward slope) before normalizing to long-term contango (upward slope).
- Short-term bullish sentiment has increased significantly, with a 250-10% delta bias for the one-week expiration, meaning traders are paying a substantial premium for call options. This is further validated by the 24-hour put-call volume, which is strongly in favor of calls (60%).
- Data from Coinglass shows $514 million in liquidations over 24 hours, with a 69-31 split between long and short positions. ETH ($155 million), BTC ($114 million), and SOL ($57 million) were the leaders in terms of notional liquidations.
- Binance’s liquidation heatmap shows $114,350 as the base liquidation level to watch, in case of a price rally.
Symbolic discussion
By Olivier Knight
- The altcoin market began showing signs of strength on Wednesday, with traders shifting to higher beta tokens ahead of potential political headlines.
- The TRUMP token, touted by President Donald Trump in January, led the movement, rallying as optimism grew that a U.S.-China trade deal could be reached.
- has also increased, supported by constant activity on base-based DeFi protocols. The token added 7.2% reaching its highest level since the beginning of the month.
- The market has consistently shown a preference for bitcoin, with CoinMarketCap’s altcoin season indicator remaining at 26/100.
- Altcoin gains were limited to memecoins and DeFi tokens, while larger tokens traded in tight ranges.
- and hedera (HBAR) both gave up much of their gains on Wednesday, with the former down 6.9% in 24 hours while hedera fell 4.5% despite a spot HBAR ETF going live on the NYSE on Tuesday.
