Crypto market plunged to April lows on Friday, with bitcoin and ether both fell about 10% in 24 hours.
BTC was recently trading around $82,200 and ETH near $2,700. The altcoin market is faring worse than major cryptocurrencies, with several tokens falling as much as 20%. The CoinDesk 20 Index (CD20) fell 10%, while the CoinDesk 80 Index of the next largest coins lost 12%, with all members in negative territory.
This massive sell-off was partly due to the liquidity crisis that emerged during the October sell-off and liquidation. Recent research from CoinDesk found that liquidity was still hollow after the crash, paving the way for more violent price swings.
It’s not just crypto that has felt the pressure. U.S. stocks also fell and the Nasdaq 100 is now trading 9.4% below its October 31 record.
Positioning of derivative products
- Bitcoin’s 30-day implied volatility index, BVIV, exceeded 64%, extending this month’s rally.
- The Ether Volatility Index jumped to 87%, its highest level since April 10.
- Both of these moves indicate growing uncertainty in the market and growing demand for options as spot prices fall.
- BTC’s open interest (OI) crashed to 700,000 BTC from 752,000 BTC in a day as falling prices dented bullish leveraged bets. According to one analyst, some traders are “catching a knife” – or buying futures contracts in a falling market, which is likened to catching a falling knife.
- OI has collapsed across the board over the past 24 hours, with DOGE, ENA, and ASTER seeing declines of over 15%.
- On Deribit, BTC and ETH options continue to show a bias towards puts.
- In BTC, put spreads represent 46% of the total block flow over 24 hours, with a diagonal sell spread a close second. ETH flows show a similar profile.
- Some traders obtained out-of-the-money IBIT put options at the $15 strike price. (yes, you read that right).
Symbolic discussion
By Olivier Knight
- The altcoin market suffered another brutal blow on Friday as several tokens fell to multi-month lows.
- The Fear and Greed Index reached 11/100, its lowest since CoinMarketCap began recording it in June 2023.
- , , , And all have lost between 16% and 18% of their value in the past 24 hours as traders sell into an incredibly illiquid market.
- Bitcoin and ether have not been immune, falling around 10% each, although the average cryptocurrency Relative Strength Index (RSI) is currently in “oversold” territory, meaning the market could be in for a relief rally.
- While the market as a whole was facing a brutal sell-off, a few traders managed to pocket millions of dollars by tapping into base founder Jesse Pollak’s creative coin, JESSE. According to Arkham Intelligence, two of the traders collectively earned $1.3 million by purchasing the tokens in the same block where the token was deployed.
