The crypto market continued to show weakness Tuesday morning, largely following a selloff in U.S. tech stocks and a correction in precious metals prices.
Bitcoin is trading at $68,000, down 1.25% since midnight UTC, while Nasdaq and gold futures have lost 0.55% and 2.4%, respectively, over the same period.
Altcoins also lost ground as popular memecoins PEPE, DOGE and TRUMP led the decline, losing between 3.5% and 4.5%.
The tech selloff was driven by fears about artificial intelligence and how it could disrupt multiple industries. Bitcoin has been closely tied to the Nasdaq since February 3, with the correlation coefficient indicator increasing from minus 0.68 to plus 0.72 over the past two weeks.
Gold, meanwhile, is currently trading at $4,928 after failing to establish a support level above $5,000. The precious metal hit an all-time high of $5,600 on January 28 before a historic correction of 21.5% over the next four days.
Positioning of derivative products
- Crypto futures continue to experience capital outflows. Cumulative sector-wide notional open interest declined 1.5% to $93 billion in 24 hours, hitting new multi-month lows.
- Leveraged bets worth $229 billion were liquidated by exchanges over 24 hours, with long positions (bullish plays) accounting for the majority of the total.
- Open interest in DOGE futures declined by 4%, leading the trend across most majors. PEPE, LINK and AVAX saw a 3-5% drop in open positions.
- Open interest in futures linked to recent outperformer HYPE cooled to 44.45 million HYPE, the lowest since early December. This likely reflects profit-taking after the token outperformed bitcoin and other majors during the recent crash.
- The market panic has eased, as evidenced by the sharp decline in the bitcoin and ether implied volatility indices from monthly highs.
- On Deribit, puts on Bitcoin and Ether continue to trade at higher prices than calls, indicating continued downside fears. However, the positioning is now as defensive as it was two weeks ago.
Symbolic discussion
- Altcoins continue to track Bitcoin, as the “Bitcoin dominance” metric now sits between 57.4% and 60.1% since September.
- Over the past seven days, AI token MORPHO has seen a 23.5% gain, while privacy coin zcash is up 19% over the same period.
- Conversely, the Layer 1 blockchain token Layer Zero (ZRO) lost 16% over the past week as it continues to lose momentum following the announcement of a collaboration agreement with Citadel Securities and DTCC.
- The relative weakness of several altcoins continues to persist over shorter time frames, with HYPE, SUI and ASTER all losing between 3% and 4.8% since midnight UTC as the crypto market waits for a bullish catalyst.
