Bitcoin and ether extended their descents over the past 24 hours, each falling more than 7% as a wave of bearish sentiment gripped the market.
The Fear and Greed Index fell to 11.00, the lowest this year, indicating extreme bearish sentiment.
“Bitcoin has returned to an area that saw strong resistance from March to October 2024. This explains the current interest from bargain hunters,” said Alex Kupsikevich, chief market analyst at The FxPro, in an email to CoinDesk.
“If we look at a similar phase of the market cycle, an equally intense sell-off in May 2022 ended with prices consolidating around one level for a month, followed by a deeper fall,” he added.
Bitget’s chief market analyst said derivatives selling and leveraged positioning amplified declines across the board, squeezing price action. Macroeconomic and sentiment headwinds, including risk-averse reactions to geopolitical and interest rate uncertainty, have reduced appetite for higher beta assets like XRP, he said.
In traditional markets, oil price volatility remained high, factoring in a potential escalation of tensions between the United States and Iran. A rise in oil prices could worsen the inflationary impulse around the world, further complicating things for crypto bulls.
Positioning of derivative products
- The cryptocurrency futures market continued to experience capital outflows as cumulative notional open interest fell to $103 billion and leveraged positions were forced to close due to a lack of margin.
- Over $800 million in leveraged bets were liquidated by centralized exchanges in the last 24 hours and this figure could rise significantly given that BTC just fell below the $70,000 pivot support.
- Despite the liquidations, 90-day Bitcoin futures are still trading at a premium to the spot price. Bear markets generally bottom out when the premium evaporates.
- Open Interest (OI) in a few select tokens such as link , and PEPE (PEPE) increased.
- The annualized perpetual funding rates of several altcoins have turned negative, a sign of higher demand for bear plays, which is typical of a downtrend.
- On Deribit, options reflect maximum fear, with short-term bitcoin and ether putting trades at a premium of more than 10 points to calls.
- Bearish plays like put spreads continue to dominate Bitcoin block flows. Block trades are large bets negotiated privately over-the-counter.
Symbolic discussion
- The altcoin market largely trailed bitcoin during Asian and European hours, with prolonged losses in monero privacy coins. and zcash both down as much as 7%.
- XRP lost more than 10% overnight after being weighed down by $30 million in liquidations. The sharp fall reached a level at 09:00 UTC as prices fell from $1.44 to $1.35.
- The lone outlier in the altcoin market was derivatives exchange token MYX, which saw a 4% gain in the past 24 hours, building on a 56% year-to-date rally.
- The bitcoin-heavy CoinDesk 20 Index (CD20) lost 8.34% over the past 24 hours, underperforming the altcoin-heavy CoinDesk 80 (CD80), which fell 5.92%.
- Several altcoins are now showing signs of a deep downtrend characterized by a series of lower lows and higher highs not seen since the 2022 bear market.
