The crypto market is showing signs of strength on Tuesday with bitcoin rising to $76,500, a gain of about 1% since midnight UTC.
The price rose to about $77,000 at 9:45 a.m. before encountering a wave of spot sellers who are likely protecting a potential breakout above Friday’s high of $78,300.
Ether (ETH) lagged behind bitcoin, rising just 0.3% to $2,320 as investors remained wary of altcoins following the $290 million drain on KelpDAO over the weekend.
Price action is still dictated by the war in Iran, with the US vice president due to travel to Pakistan for peace talks. A decision is likely to lower oil prices and help boost risk assets that have been inversely correlated since the war began.
US stock index futures rose, showing a return to risk-on sentiment.
Derivatives positioning
- The long-short ratio for the crypto futures market is 50.68%, indicating an almost equal split between bullish and bearish positions. In other words, traders are largely uncertain about the direction of the market’s next move.
- In the last 24 hours, major tokens like BTC, SOL, HYPE and BNB have added 1%-3% in futures open interest (OI), a sign of capital inflows. ETH, DOGE and ZEC have seen small drops in OI.
- Open interest in AAVE futures has risen to a record 3.59 million tokens. At the same time, the OI-adjusted cumulative volume delta has turned negative – indicating sell orders are dominating and pushing into bids – while funding rates remain close to zero. Overall, the setup points to a slight bearish bias.
- Bitcoin and ether funding rates remain negative, suggesting a bias towards short positions. This consistent bearish environment creates the potential for a short squeeze. It’s a scenario where price stability encourages bears to dump their bets en masse, adding to the upward momentum in the spot price.
- On the CME, activity in BTC futures continues to cool, even as the exchange-traded funds pull in millions. This combination indicates that inflows into the ETFs are mainly bullish directional plays rather than arbitrage bets involving a short BTC futures position against the ETF’s long position.
- On Deribit, the BTC and ETH puts continue to trade at a premium to calls, reflecting downside concerns.
- Speaking of block flows (large trades executed over-the-counter), BTC straddles and strangles cumulatively account for over 50% of activity over the past 24 hours.
Token talk
- The altcoin market is still reacting to the weekend’s $290 million leverage on KelpDAO with decentralized finance (DeFi) tokens ethena (ENA), etherfi (ETHFI) and jupiter (JUP) all posting losses over the past 24 hours despite a marginal rebound since midnight UTC.
- The CoinDesk Memecoin Index (CDMEME) is the worst-performing benchmark on Tuesday, losing 0.24%, while the bitcoin-dominant CoinDesk 20 (CD20) is up 0.65%.
- The altcoin market is showing indecision, with the CoinDesk 80 (CD80) remaining flat during the Asian and European sessions.
- AAVE is starting to recoup some of its weekend losses after a 22% drop, adding 2.6% despite widespread negative sentiment across the DeFi sector.
- CoinMarketCap’s “Altcoin Season” indicator is at 39/100, up from the weekend’s low of 34/100, but still showing investor preference for bitcoin over altcoins.
