The crypto market was volatile late Tuesday after Strategy ( MSTR ) Chairman Michael Saylor stated that his company could sell bitcoin to pay dividends on the STRC instrument, leading to short-lived panic in price action.
However, BTC regained the $82,000 mark during the European morning on Wednesday after gaining around 1.3% since midnight UTC, mainly spurred by a weakening of the US dollar, which has fallen 0.5% over the same period.
The dollar’s weakness comes after US Secretary of State Marco Rubio said the US had “achieved its military objectives” and was “not interested in further escalation”, which also led to a drop in oil prices.
Risk assets like the crypto market were poised to react well to the news, as it means the Fed could start a rate-cutting cycle, as opposed to any hikes launched at the start of the war to fight inflation.
Ether (ETH) is trading at $2,380 after rising about 0.8%, although it remains crucially below the April 17 high of $2,460 after underperforming bitcoin.
Derivatives positioning
- Positioning in bitcoin futures remains high, with open interest hovering near an all-time high of 800K BTC. Still, perpetual funding rates remain flat to slightly positive, suggesting the market is anything but overheated or crowded. It is a healthy sign that the market is being led higher by steady demand, rather than speculative fervor.
- The same can be said for the ether market, where open interest has risen to 14.5 million ETH, the highest since March 28.
- The standout among the top five is SOL, where open interest rose 6% over the past 24 hours to 61.79 million tokens. Zooming out, that level still only marks a three-week high.
- Speaking of the broader market, TON is registering strong capital inflows as evidenced by a 6% increase in open interest to 213 million tokens. Open interest has reached a new high for the third day in a row. But once again funding rates remain low and not so positive, pointing to continued hedging by spot buyers.
- The broader picture has turned from bearish to bullish over the past 24 hours. At the time of writing, the OI-adjusted cumulative volume delta (CVD) for most coins, except HBAR and CC, is positive. This indicates that buyers are driving the trading activity by placing more market orders than sellers rather than relying on passive limit orders. This marks a sharp contrast to the previous day when most coins had negative CVD.
- The compression of bitcoin and ether volatility continues, with the ETH index, EVIV, falling to 55% earlier today, a level last seen on January 31st. The sustained decline supports bullish spot price action.
- On Deribit, bitcoin call options, or bullish bets, at strikes from $82,000 to $115,000 were among the most traded contracts over the past 24 hours. However, risk reversals still show a slight general bias across timeframes.
Token talk
- The altcoin market showed signs of strength on Wednesday, with a number of assets posting double-digit gains. Among these were popular privacy coins zcsah (ZEC) and dash (DASH), which are up 14% and 16% respectively since midnight UTC.
- Without a clear news catalyst, investor confidence appears to be driving the rally after a period of consolidation between early February and early May that led to persistent oversold conditions.
- The altcoin-dominant CoinDesk 80 (CD80) index was the best-performing benchmark on Wednesday, rising 3.5%, while the CoinDesk 20 (CD20) lagged around 1.5%.
- The early week rally in memecoins is now starting to cool with capital rotating to other sectors, notably components of the CoinDesk Computing Select Index (CPUS), which includes chainlink and bittensor (TAO), which is up 3.1% and 2% respectively.
