The crypto market has seen a “news sell” reaction to the Federal Reserve’s interest rate cut and the US trade deal with China, along with bitcoin. returning to the $110,000 support level.
Traders will now wonder if the recent high, just below $116,000, will mark a lower high than bitcoin’s record $126,000 hit earlier this month, which would indicate traces of a downtrend and reversal.
Bitcoin dominance fell a few basis points on Thursday, suggesting that some altcoins are outperforming BTC despite market weakness being reflected in the crypto majors.
Positioning of derivative products
By Saksham Diwan
- Despite the drop in the price of bitcoin that occurred yesterday after the Fed’s announcement, the BTC futures market is showing strength: open interest (OI) increased slightly to $27.2 billion, confirming minimal liquidations and a rapid re-entry of buyers.
- Basically, funding rates, which were very polarized, have normalized and now tend to be neutral and almost stable on most sites. This speaks to an underlying resilience in the market and a less volatile and more measured sentiment compared to previous uncertainty.
- The BTC options market maintains a strong uptrend, although short-term conviction has moderated.
- The term structure of implied volatility (IV) always exhibits short-term backwardation before moving into long-term contango. The one-week 25 delta skew has fallen to 8%, down from 10% yesterday, but traders are still paying a significant premium for short-term call options.
- This reduced conviction is reflected in the 24-hour put-call volume ratio, which remains bullish at 55:44 in favor of calls.
- Data from Coinglass shows $821 million in liquidations over 24 hours, with a 79-21 split between long and short positions.
- BTC ($368 million), ETH ($188 million) and others ($52 million) were the leaders in terms of notional liquidations. Binance’s liquidation heatmap shows $109,700 as the base liquidation level to watch, in case of a price decline.
Symbolic discussion
By Olivier Knight
- More than $80 billion was wiped from the total cryptocurrency market capitalization in the past 24 hours as traders “sold the news” following the Fed’s interest rate cut and a US-China trade deal.
- Bitcoin and ether the two largest cryptocurrencies, are both down 2.5% as they grapple with support levels. XRP and XLM were the worst performing tokens among the top 20, losing 3.5% and 3.3%, respectively.
- Plasma continues to make headlines for the wrong reasons, falling 14% in 24 hours to compound an overall loss of 81% since September 28.
- A glimmer of optimism in the altcoin market was TRUMP, the memecoin backed by the US president, which rose 6.8% after news emerged that Fight Fight Fight, the company that manages the token, is considering acquiring US fundraising platform Republic.
- TRUMP is now up 45% this week, although at $8.40 it remains well below its record high of $45.47.
- Bitcoin’s dominance decreased slightly from 59.3% to 59.0%, suggesting that some altcoins are outperforming bitcoin during this latest period of selling pressure.
