The major cryptocurrencies remained under pressure for a fourth straight day, with bitcoin falling 2.5% in 24 hours to just below $62,400.
It is not alone. The CoinDesk 20 Index (CD20) is down 3.3%, with ether (ETH), XRP (XRP) and solana (SOL) all weaker. The CoinDesk Smart Contract Platform Select Capped Index fell 4%, with the CoinDesk 80 and CoinDesk DeFi Select Index following close behind.
Concerns about Strategy ( MSTR ), the Michael Saylor-led bitcoin tax company, continue to dominate market sentiment, with particular focus on its dividend-paying preferred stock, STRC.
“Strategy, the largest listed BTC holder, has seen its STRC preferred collapse below par, and the market is now clearly pricing in the tail that it needs to sell coins to defend the structure,” analysts at Marex said.
“Add five consecutive months of BTC trading below its estimated production cost of $78,000, quietly forcing the weakest miners to capitulate, and you have two real sellers who weren’t in the frame a week ago,” they added.
Derivative positioning
- Bulls continue to bleed as the market wilts in the wake of Wednesday’s hawkish Fed meeting. In the last 24 hours, more than $450 million in leveraged bets have been liquidated. As has been the case since the meeting, most are longs.
- Open interest (OI) in bitcoin and ether futures is largely unchanged over the past 24 hours. SOL futures OI rose to over 70 million tokens, just shy of the June 5 record of 71.57 million. In other words, demand for leverage remains near all-time highs, pointing to the potential for excessive volatility.
- The same is the case with XRP, where futures OI is hovering at its highest since last October.
- In terms of cumulative volume delta, most of the top 25 tokens, except for TRX and LAB, show negative OI-adjusted CVD in the last 24 hours. It is a sign that sellers are trading market orders leading to the price action as opposed to passive limit orders. It’s been the same playbook since at least Wednesday.
- Funding rates for most tokens remain flat to negative, indicating a bearish sentiment. ADA, XLM and BCH funding rates are down to between minus 20% and minus 30%.
- In the bitcoin options market, traders are lifting in size put options and preparing for a potential drop down to $52,000 or lower in the coming weeks.
- The bearish sentiment is also evident from 25-delta biases, which show a week trading with a volatility premium of 10% or more.
Token Talk
- Need proof of how crazy sentiment around AI is? Check out the LAB token, the cryptocurrency native to the LAB terminal, a browser-based and extensible platform for high-performance trade execution. Its key feature: AI-powered research and trade routing to minimize slippage.
- LAB has gained 57% in seven days, a staggering increase compared to the malaise of the broader market.
- The outperformance doesn’t end there: the token is up 92% this month after gains of 900% in May, 250% in April and 78% in March. Talk about a bull market.
- In the same period, bitcoin has risen from $68,000 to $82,000 and back to $63,000.
- While LAB’s performance is impressive, there is no obvious reason for it. And it is not without controversy.
- Blockchain research expert ZachXBT recently highlighted that insiders allegedly own 95% of the token’s supply. He said they have used four methods simultaneously to attract retail investors. These include high-interest over-the-counter loans with promotional terms, unilateral vesting period extensions, delayed or withheld market rewards, and undisclosed market-making agreements.
- As the old saying goes: All that glitters is not gold.
