Bitcoin recovered 0.7% on Wednesday, but remains at a crucial crossroads after a 9.5% decline since Sunday.
The largest cryptocurrency recently traded near $67,000, firmly in the middle of a range that persisted between February and April after a failed attempt at a breakout above $81,000 last month.
If bitcoin falls below $60,000, it would likely trigger a wave of liquidations and a possible fall to $54,000, a support level going back to both 2024 and 2021.
Ether (ETH), meanwhile, is trading at $1,870 after rising 0.9% since midnight UTC, although the rebound comes after a selloff that saw it fall to its lowest level since February.
The US stock market hit record highs again on Tuesday. The divergence is starting to raise concerns among some crypto investors, as the two asset classes have historically moved in tandem.
AI crypto tokens continued to outperform their peers. NEAR, RENDER and FET all rose about 9% on Wednesday following Tuesday’s market sell-off.
Positioning of derivative products
- More than $1.7 billion in leveraged cryptocurrency futures bets have been liquidated in the past 24 hours, double the amount from the previous day.
- Most of the liquidations were bullish long positions after BTC fell to $65,500 earlier today. 24-hour volume jumped 27% to nearly $300 million, while cumulative industry-wide notional open interest (OI) fell just over 2%.
- The combination of large liquidations and falling open interest suggests an aggressive crowding out of leveraged bull plays and a reduction in new leveraged exposures.
- Open interest in Bitcoin futures hits record levels above 800,000 BTC, rising for the third day in a row, even as spot prices fall. This validates the downtrend and indicates an influx of new shorts or bearish positioning.
- The OI-adjusted seven-day cumulative volume delta is negative, indicating that bears are driving price action by actively shorting with market orders rather than using passive limit orders.
- Most major tokens, including ETH, ADA, SUI, XRP, and SOL, are also showing negative seven-day and 24-hour cumulative volume deltas, signaling bearish leadership in the markets. Funding rates for these tokens remain slightly positive to slightly negative, implying that the bear side is not overcrowded and there is room for further decline.
- Open interest in ZEC futures, however, increased for the third day in a row to 2.43 million ZEC, as the token gained 6.3% over seven days, countering the broader malaise. ZEC also shows a positive 24-hour CVD alongside HYPE, indicating bullish sentiment.
- The fear returns. The BTC and ETH 30-day implied volatility indices (BVIV and EVIV) jumped sharply on Tuesday, posting their biggest one-day gains since the February 5 crash. The continued increase in the measure could portend further difficulties in the market.
- Options flow on Deribit shows traders paying for downside protection. The one-week put-call spread climbed to nearly 20% early in the day, reflecting outsized demand for puts. The most traded instruments in the last 24 hours were the $70,000 put expiring June 5 and the $55,000 put expiring June 26.
- In block flows, BTC call spreads and ETH put spreads were the most favored bets.
Symbolic discussion
- Ethena (ENA) is one of Wednesday’s best-performing altcoins, up 9.3% since midnight UTC and more than 20% in 24 hours after Coinbase (COIN) announced it would integrate Ethena’s features into a new savings account product.
- There was a notable gain for the zcash (ZEC) privacy coin. The token is up 2% since midnight and 12% over the past 24 hours as it attempts to move away from danger.
- CoinMarketCap’s “Altcoin Season” indicator is now at 53/100, the highest since early March, as investor appetite for high-risk altcoins persists despite weakness among crypto majors.
- Humanitarian Protocol (H) appears to be entering a corrective phase after losing a quarter of its value in 24 hours following a 200% rally last week, with sharp profit-taking. Daily trading volume fell 55% to $314 million.
