Crypto market strength extended to Tuesday with bitcoin up 3.9% since midnight UTC to trade at $71,000, while ether (ETH) is back above $2,000, a level it recently struggled to surpass.
Crypto was not alone in its ascent. US stocks and precious metals also after US President Donald Trump said the war in Iran would come to an end “very soon”. The dollar and oil gave back much of their gains in the past week.
The dollar index (DXY) briefly traded as high as 99.7 on Monday and is now at 98.5. The crypto market is inversely correlated to the dollar, so a bitcoin breakout could be on the cards if DXY continues to weaken through the rest of the week.
The war in Iran – which it seems may now be shorter than many thought – has revealed a resilience in the crypto market that was previously absent. Bitcoin had beaten stocks and precious metals since the conflict began, potentially rebuilding the asset class’ reputation as a safe-haven investment.
But it’s not out of the woods yet. Bitcoin and the broader market remain in a clear downtrend since early October, punctuated by a series of lower highs and lower lows. To break this trend, bitcoin needs to trade back up towards $98,000 after establishing levels of support along the way.
Derivatives positioning
- Open interest (OI) in futures linked to HYPE, the best-performing token in the last 24 hours, has grown 14% to $1.41 billion, according to Coinglass. OI topped 40 million HYPE, a level that remains close to recent lows.
- For both BTC and ETH, open interest is up more than 5%, outstripping gains in spot prices. This shows new capital inflows as markets rise.
- In Tether Gold (XAUT), futures OI continues to decline and has fallen below 110K XAUT, a sign that investors are rotating money out of recent outperformers such as gold-linked assets.
- Annualized perpetual funding rates for most tokens remain weakly positive, suggesting a narrow dominance of bullish bets. Tokens like ZEC and SUI stand out with negative rates.
- Most major cryptocurrencies, except for BCH, XMR and XAUT, have seen aggressive bidding as evidenced by their OI-adjusted cumulative volume deltas.
- BTC and ETH’s 30-day implied volatility indices, BVIV and EVIV, are down over 4%, a sign that traders are pricing in uncertainty in the wake of oil’s fall back below $100.
- Still, on Deribit, BTC and ETH hedges remain more expensive than bullish calls across all timeframes. Positioning of market makers is such that volatility could increase significantly on a potential BTC price move above $75,000.
- Block flows contained demand for BTC straddles, a volatility bet, and call spreads, a bullish strategy. In ETH’s case, traders were chasing risk reversals.
Token talk
- The altcoin market was particularly buoyant on Tuesday, with Solana-based DEX token jupiter (JUP) posting double-digit gains since midnight UTC.
- Retaking token ETHFI also rallied, rising 6.5% to hit its highest point since January 29.
- HYPE, the native token of derivatives exchange HyperLiquid, was more subdued, rising just 0.5% since midnight. That’s despite BitMEX founder Arthur Hayes calling for record highs of $150 in a blog post on Monday. HYPE is now trading at $34.8, with much of its 24-hour gains coming early Monday before Trump’s comments on the war.
- The best-performing CoinDesk benchmark over the past 24 hours was the bitcoin- and ether-heavy CoinDesk 5 (CD5) and CoinDesk 10 (CD10) indices both up 4.3%, while the DeFi Select Index (DFX) was close behind after rising 4%.
- The same could not be said for the memecoin index (CDMEME), which is at the bottom of the pack after rising only 2.6%.
