The crypto market showed signs of volatility on Tuesday, with bitcoin climbing to $68,300 shortly after midnight UTC before falling back to $66,500.
The initial rise was sparked by reports that US President Donald Trump was prepared to end the war in Iran without the opening of the Strait of Hormuz. Optimism faded after Israeli officials said they were ready to “continue operating for the coming weeks.”
The war, now in its 32nd day, has sent energy prices soaring, with Brent crude trading around $107 a barrel, leading to inflationary concerns and a widespread sense of risk aversion.
The crypto, despite being relatively resilient throughout March, is starting to show signs of weakness after bitcoin failed to surpass $75,000 twice.
U.S. stocks traded lower in the crypto market on Tuesday, with Nasdaq 100 and S&P 500 index futures both adding 0.8%.
Positioning of derivative products
- Cumulative industry-wide crypto futures open interest (OI) fell more than 3% to $103.79 billion in 24 hours, continuing the risk-averse trends seen throughout the first quarter. This figure has decreased by more than 18% since the start of the year.
- OI decreased on BTC, ETH, SOL and XRP futures contracts, indicating capital outflows from major cryptocurrencies. Other tokens, such as BCH, AVAX, and LTC, saw double-digit declines in open interest.
- Privacy-focused ZEC stands out, with its futures market showing an uptrend. The token’s OI increased by over 3%, alongside slightly positive funding rates and cumulative volume delta. This combination indicates increasing demand for bullish exposure.
- At the other end is DOGE, which has the most negative 24-hour cumulative volume delta among major tokens.
- Bitcoin’s 30-day implied volatility index, BVIV, rose 58% from 54% late last week, surpassing its 50-day average to suggest more gains to come. This means potential for increased price turbulence.
- The Ether volatility index remains stable between 70% and 80% for the seventh consecutive day.
- On Deribit, Bitcoin risk reversals through late June expiration show a strong bias toward puts. These downside hedges trade at an 8 to 10 point volatility premium over call options. Meanwhile, the downtrend is relatively measured in the ether.
- The $60,000 Bitcoin put remains the most popular play with total open interest of $1.50 billion.
Symbolic discussion
- The altcoin market suffered more than bitcoin on Tuesday, with tokens like NEO, HBAR and PUMP losing between 2.6% and 3.3% since midnight UTC.
- A select few tokens are bucking this trend, including BCH and AI-related coins, which are in the black.
- CoinMarketCap’s “Altcoin Season” indicator currently reads 51/100, reflecting relative strength over the past few weeks despite Tuesday’s sell-off.
- However, the next major move will still be determined by Bitcoin and its ability to move above $75,000 or below $62,000. Altcoins generally perform well when bitcoin consolidates, but lose ground during large swings.
