The crypto market received a much-needed boost Tuesday evening after US President Donald Trump announced a two-week ceasefire in Iran.
Bitcoin surged to around $72,700 after settling in the $71,800 region, ether (ETH), meanwhile, is changing hands at $2,250 after posting a 6% gain over the past 24 hours.
The market remains stuck in the same range since early February despite the overnight rise. Bitcoin will need to trade above $75,000 to confirm a breakout, while a rejection here could signal a return to around $65,000.
Traders will cautiously wait until the ceasefire ends in a fortnight to see if an agreement can be reached or if the conflict will resume.
Oil fell sharply following the news, with Brent now trading at $94 a barrel, down from Tuesday’s high of $114.
Positioning of derivative products
- Nearly $600 million in crypto futures bets were liquidated in 24 hours due to a lack of margin. The bearish short positions total more than $420 million, showing that leverage was skewed downward, likely in anticipation of an intensification of the military conflict between the United States and Israel. However, the ceasefire announcement put investors on the wrong side of the market.
- Nonetheless, cumulative open interest in crypto futures rose 7% to $114.26 billion, the highest since March 17, indicating further capital inflows.
- Ether (OI) open interest increased 6% to 14.22 million ETH, the highest since March 29. This, coupled with positive perp funding rates (long positions paying off) and a positive 24-hour cumulative volume delta (CVD), incentivize traders to bid hard for an upside.
- The Bitcoin market shows a similar profile, with OI up 1% alongside bullish funding rates and CVDs.
- ZEC stands out with annualized perpetual funding rates at minus 56%. This shows that traders are aggressively pursuing bearish short positions.
- Bitcoin’s 30-day implied volatility index, BVIV, continues to decline and has fallen to 46%, its lowest level since January 31. This signals market calm and strengthens the bullish case for spot prices.
- Ether’s 30-day implied volatility also continues to decline, but remains slightly elevated relative to Bitcoin.
- On Deribit, the relative wealth of bitcoin and ether put options continues to shrink relative to calls as the U.S.-Iran ceasefire sets the stage for bullish spot price action.
- Block flows included demand for ether strangulation, a strategy focused on volatility.
Symbolic discussion
- Parts of the altcoin market outperformed bitcoin and its peers on Wednesday, with the likes of zcash (ZEC) posting a 23% rise while layer 1 token Monad (MON) rose over 15%.
- There were also notable gains for Layer Zero (ZRO) and Ethena (ENA), which jumped 14% each to end recent downtrends.
- AI tokens also performed well with near double-digit gains at NEAR, RENDER, and TAO.
- The Bitcoin-dominated CoinDesk 20 Index (CD20) is up 4.9% over the past 24 hours, being beaten by the DeFi Select Index (DFX) and the CoinDesk Computing Select Index (CPUS), which are up 7% each.
- The CoinDesk Overnight Rate (CDOR), which tracks lending and borrowing rates on Aave, continued its upward trend on Wednesday, reaching 3.51%, up from 2.8% on March 8.
