The crypto market staged a recovery on Monday with bitcoin up 2.1% since midnight UTC and ether (ETH) added 3.1%. Stronger gains occurred in the altcoin market, with tokens such as chiliz (CHZ), and optimism progress of more than 6%.
Despite the improvement in sentiment, investors remained jittery as the conflict with Iran enters a fifth week. While Pakistan expressed readiness to host “meaningful” peace talks, markets are yet to buy it. Brent crude rose to $108 a barrel over the weekend, signaling deep skepticism that a solution is close. It was trading in the low $70s before the start of hostilities.
US stock index futures responded well to Pakistan’s comments, with Nasdaq 100 futures and S&P 500 futures both up 0.25% and the dollar index (DXY) little changed at 100.2 points.
The crypto market remains in a bearish trend with higher timeframes, characterized by a series of lower highs and lower lows dating back to October. Bitcoin has remained in the same trading range since early February, failing to break above $75,000 to the upside or below $62,800 to the downside.
Derivatives positioning
- Growth in bitcoin futures open interest (OI) has stalled since hitting a nearly two-month high of 748.65 BTC on Saturday. Perpetual funding rates close to zero and negative 24-hour cumulative volume delta (CVD) suggest a bias for bearish, short positions.
- BTC OI notably fell below the spot price rally from the Asian session low of around $65,000. It shows that the rally is largely spot-driven and has yet to gain support from leveraged traders.
- On Bittfinex, the number of BTC/USD longs hit the highest since November 2023. Historically, this has been a contrarian indicator coinciding with price selling.
- OI in most major tokens, including XRP, ETH, DOGE and SOL, has remained largely flat over 24 hours.
- AVAX and LTC stand out with double-digit percentage gains in futures OI, a sign of capital inflows. However, most inflows appear to be tied to bearish bets, as indicated by their negative CVDs.
- Bitcoin’s 30-day implied volatility index is under pressure again, falling to nearly 55% after hitting 58% over the weekend. Overall, the index continues to indicate market calm despite Iran’s war-led turmoil in traditional markets. Ether’s volatility index suggests the same.
- On Deribit, BTC and ETH puts continue to cost more than calls across all timeframes, a sign of continued concerns about downside issues. The trader’s gamma is predominantly positive between $65,000 and $70,000, meaning traders can buy low and sell high, potentially keeping prices bound.
Token talk
- The CoinDesk Memecoin Index ( CDMEME ) and DeFi Select Index ( DFX ) were the two best-performing benchmarks on Monday, rising 2.8% and 2.2%, respectively, while the bitcoin-dominant CoinDesk 20 ( CD20 ) added 1.5%.
- The perceived strength of the altcoin market can be attributed to a market-wide lack of liquidity. As prices fell on Friday, the amount of supply on exchanges outweighed demand. This sent several assets well into “oversold” territory as the move was exaggerated, leading to today’s relief rally.
- This liquidity void has plagued the crypto market since October, when a $19 billion liquidation event wiped out the market structure and left numerous traders and market makers stranded in its wake.
- To break this cycle, bitcoin, the market’s anchor, needs to trade back above $80,000 and consolidate, which would mean gains could rotate into the more speculative altcoin market to establish macro levels of support.
