Bitcoin is struggling to regain its footing above $70,000 as altcoins outperform.
The largest cryptocurrency was little changed over 24 hours, while the broader CoinDesk 20 Index (CD20) rose 0.40% even as ether declined. Memecoins led the gains, with the CoinDesk Memecoin Index (CDMEME) adding 1.5% while PIPPIN climbed 46%.
Tokens related to artificial intelligence (AI) also performed well. co-founded by OpenAI CEO Sam Altman, is up more than 3% over the past day, while Virtuals’ VIRTUAL token is up 2.4%. This is as “agentic AI”, where AI tools now also perform tasks, the narrative develops.
Yet the Fear and Greed crypto index still indicates “extreme fear” in the market following last week’s sell-off.
At the same time, traditional markets have stabilized, supported in part by Prime Minister Sanae Takaichi’s landslide victory in Japan’s elections. Although Japanese bond yields rose after the results, they have since fallen near pre-election levels. This reduces the risk that trillions of dollars invested abroad will return to Japan in search of higher returns.
Positioning of derivative products
- Bearish momentum in BTC futures intensifies as open interest (OI) continues its descent to $15.9 bo;;opm, signaling a deep and prolonged deleveraging phase.
- This shift is particularly evident in funding rates on Binance (-7%) and Bybit (-8%), which have collapsed into aggressive negative territory. This is a sign that short sellers are paying a large premium to maintain their dominance. With a quarterly base stagnating at 3%, institutional appetite remains marginal.
- The BTC options market is showing a cooling of extreme defensive sentiment. 25 delta week-over-week skewness is 16%, while call dominance has rebounded to 56%, indicating a shift toward bottom fishing.
- The term structure of implied volatility (IV) shifts from extreme backwardation to a hybrid position which suggests that while short-term protection remains costly, long-term volatility expectations are stabilizing.
- Data from Coinglass shows $290 million in liquidations over 24 hours, with a 53-47 split between long and short positions. BTC ($114 million), ETH ($89 million) and others ($16 million) were the leaders in terms of notional liquidations. Binance’s liquidation heatmap shows $68,160 as the base liquidation level to watch, in case of a price decline.
Symbolic discussion
- Merkle Trade, the largest decentralized perpetual futures exchange on the Aptos blockchain, is shutting down. The exchange disabled new trading positions on Friday and will forcibly close all open positions today.
- Merkle’s native token MKL added 9% in the last 24 hours. It remains tradable with no withdrawal fees, with a final payment of staking rewards scheduled for February 12. The token has lost 77% over the past 12 months.
- The move comes less than two years after Merkle raised $2.1 million in a funding round backed by Aptos Labs, Hashed and Arrington Capital.
- Despite having processed $30 billion in trading volume since its 2023 debut, the team gave no clear reason for the shutdown in an article on X last week, only noting that the decision followed “careful review.”
