The crypto market, US stocks and precious metals all fell on Tuesday as the dollar index (DXY) rose 0.5% since midnight UTC to reach its highest level since January 19.
This risk aversion comes after the escalation of the conflict in Iran, with Israel launching new strikes on Tehran and Beirut while the American embassy in Riyadh was hit by two Iranian drones.
Gold hit a one-month high of $5,410 on Monday, but fell back to $5,260 on Tuesday as investors turned to the dollar as a safe haven.
Bitcoin was largely correlated with gold this week; it recovered on Monday to $70,000 before returning to $66,500 – firmly in the middle of a range it has occupied since early February.
The altcoin market is faring worse than bitcoin, with the likes of ADA, ZEC and DASH losing more than 4% since midnight UTC.
Positioning of derivative products
- Market dynamics have shifted to a consolidation phase, with BTC futures open interest stabilizing at $15.3 billion as post-leverage cleanup reaches equilibrium. Retail sentiment remains cautiously optimistic with funding rates ranging from 0% to 10%, while institutional confidence has weakened slightly, marked by a 3-month annualized base falling just below 3%. This suggests a firm market bottom but a temporary plateau in bullish momentum.
- The options market has moved from a “panic hedge” to a sustained uptrend, with 24-hour call volume reaching a 63/37 split. The 1-week 25 delta skew cooled to 14% (from 27%), signaling a sharp decline in the cost of downside protection. Importantly, the term structure of implied volatility (IV) has shifted to reporting, as initial premiums collapse below the stable 49-50% level seen for longer maturities, indicating that immediate fear has been replaced by medium-term growth expectations.
- Data from Coinglass shows $392 million in liquidations over 24 hours, with a 50-50 split between long and short positions. BTC ($163 million), ETH ($96 million), and Others ($20 million) were the leaders in terms of notional liquidations. The Binance liquidation heatmap shows $69,800 as the base liquidation level to watch, in case of a price rally.
Symbolic discussion
- CoinDesk’s Memecoin (CDMEME) and DeFi Select (DFX) are the best performing benchmarks over the past 24 hours, up 0.95% and 0.71% respectively.
- The AI NEAR token rebounded from oversold conditions with a 13.3% rise on Tuesday, indicating that parts of the altcoin market remained coiled, ready to rebound higher.
- However, generally speaking, the altcoin market remains in a consolidation phase as part of a downtrend dating back to October. Over the past week, PEPE, ATOM, SHIB and BCH have all lost double digits, although bitcoin remains in the middle of its trading range.
- DeFi tokens JUP and MORPHO bucked the consolidation trend, rising 23% and 20% respectively over the past week, with continued gains on Tuesday.
