The crypto market consolidated with bitcoin falling back to $113,100 and ether continues to struggle with the psychological level of support at $4,000.
There are two key catalysts from a macro perspective this week: the Federal Reserve’s interest rate decision due later Wednesday and a potential trade deal between the US and China.
The market expects a rate cut to 375-400 basis points (bps), although it is worth noting that if the Fed keeps rates steady at 400-425, the market will likely sell off because the dollar will rise.
Meanwhile in the Far East, Chinese President Xi Jinping will meet US President Donald Trump as a deal nears completion. A deal is likely to boost U.S. stocks and, by proxy, bitcoin because the largest cryptocurrency is positively correlated with the U.S. stock market.
Derivative positioning
By Saksham Diwan
- The BTC futures market is holding steady with open interest (OI) at $26.8 billion.
- However, the funding rates are very divergent: Deribit shows an aggressive rise to 24.64% y-o-y, signaling strong demand for long positions, while OKX fell to -3%, where shorts are paid.
- This mix of persistently high OI and polarized fund yields indicates heightened near-term market volatility and uncertainty, disrupting the previously consistent bullish sentiment.
- In the options market, bitcoin is showing a strong increase in bullish conviction. The implied volatility (IV) term structure shows a slight short-term backwardation (downward slope) before normalizing to long-term contango (upward slope).
- Short-term bullish sentiment has increased significantly, with the 250-delta bias at 10% for one-week expiration, meaning traders are paying a significant premium for call options. This is further validated by 24-hour put call volume, which is strongly in favor of calls (60%).
- Coinglass data shows $514 million in 24-hour liquidations, with a 69-31 split between longs and shorts. ETH ($155 million), BTC ($114 million) and SOL ($57 million) led the way in fictitious liquidations.
- The Binance liquidation heatmap indicates $114,350 as a core liquidation level to monitor in the event of a price rally.
Token Talk
By Oliver Knight
- The altcoin market began to show signs of strength on Wednesday, with traders rotating into higher-beta tokens ahead of potential political headlines.
- The TRUMP token, touted by President Donald Trump in January, led the move and rallied as optimism grew that the US and China were nearing a trade deal.
- also increased, supported by steady activity across Base-based DeFi protocols. The token added 7.2% as it hit its highest level since the start of the month.
- The market still showed a preference for bitcoin, with CoinMarketCap’s “altcoin season” indicator remaining at 26/100.
- Altcoin gains were limited to memecoins and DeFi tokens, while major tokens traded in tight ranges.
- and hedera (HBAR) both gave back much of their gains on Wednesday, with the former down 6.9% in 24 hours, while hedera fell 4.5% despite a spot HBAR ETF going live on the NYSE on Tuesday.
