The crypto market, US stocks and precious metals tumbled on Tuesday as the dollar index (DXY) rose 0.5% since midnight UTC to its highest level since January 19.
The risk-off sentiment comes after the escalation of the conflict in Iran, with Israel launching new attacks on Tehran and Beirut, while the US 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 choose the dollar as a safe haven.
Bitcoin has been largely correlated with gold this week; rally 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 fared worse than bitcoin, with the likes of ADA, ZEC and DASH losing upwards of 4% since midnight UTC.
Derivatives positioning
- Market momentum has moved into a consolidation phase, with BTC futures Open Interest stabilizing at $15.3 billion as the post-leverage cleanup reaches equilibrium. Retail sentiment remains cautiously bullish with funding rates between 0% and 10%, while institutional sentiment has eased slightly, marked by 3-month annualized basis falling just below 3%. This suggests a firm market floor, but a temporary plateau in upward momentum.
- The options market has shifted from “panic hedging” to sustained bullishness, with 24-hour call volume rising to a 63/37 split. The 1-week 25-delta bias has cooled to 14% (down from 27%), signaling a sharp decline in the cost of downside protection. Crucially, the implied volatility (IV) term structure has moved into contango as front-end premiums collapse below the stable 49%-50% seen in longer tenors, indicating that immediate fears have been replaced by medium-term growth expectations.
- Coinglass data shows $392 million in 24-hour liquidations, with a 50-50 split between longs and shorts. BTC ($163 million), ETH ($96 million) and Others ($20 million) led the way in fictitious liquidations. Binance liquidation heatmap indicates $69,800 as a core liquidation level to monitor in case of a price rally.
Token talk
- CoinDesk’s Memecoin (CDMEME) and DeFi Select (DFX) indices are the best performing benchmarks over the past 24 hours, rising 0.95% and 0.71% respectively.
- AI token NEAR bounced back from oversold conditions with a 13.3% move to the upside on Tuesday, indicating that parts of the altcoin market remained coiled up and ready to jump higher.
- Overall, however, the altcoin market remains in a consolidation phase as part of a downtrend dating back to October. Over the past week, the likes of PEPE, ATOM, SHIB, and BCH have all lost double digits despite bitcoin remaining 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 a continuation to the upside on Tuesday.
