The crypto market is facing a wave of selling pressure with bitcoin and ether (ETH) lost 1.1% and 1.7% respectively since midnight UTC.
The move to the downside comes after bitcoin surged to a monthly high of $65,500 on Wednesday, prompting some traders to take profits.
Altcoins PUMP and ZEC also fell, falling 4.4% each after Tuesday’s strong rally faded, highlighting a lack of liquidity in both directions.
US stocks also lost ground. Futures on the tech-dominant Nasdaq 100 index retreated 0.25%, extending a downtrend that began 30 days ago.
One of the main catalysts for price action across all asset classes is the war in the Middle East, with Iran launching attacks on US military bases in neighboring Gulf states on Thursday and the US continuing its wave of airstrikes.
Derivatives positioning
- Ether’s price is down 1.7% since midnight UTC, slightly more than bitcoin’s drop. ETH’s underperformance appears to be driven by bullish unwinding of plays rather than aggressive new short selling. This is evident from the drop in open interest (OI) to 14.35 million ETH from the five-week high of 14.45 million ETH hit on Wednesday. Futures linked to BTC show similar dynamics.
- Meanwhile, OI in XRP rose to a 10-day high of 2.21 billion XRP along with a 0.6% drop in the spot price. This combination is considered to represent a growing bias for bearish exposure, although XRP’s positive funding rates contradict this interpretation. That said, the 24-hour cumulative volume delta (CVD) for XRP is negative, meaning that short plays are executed on market orders rather than passive limit orders.
- Another notable winner of open interest is SUI, the native token of the Sui blockchain. Positions are up 15%, although the total OI of 654 million tokens remains in line with levels seen earlier this week. The SUI token has fallen almost 2% over 24 hours.
- Broadly speaking, most coins except BTC, ETH and XMR have a negative 24-hour OI-adjusted cumulative volume delta (CVD), a sign that bears are leading the price action.
- Bitcoin’s 30-day implied or expected volatility index has risen 2% to 38%. Volatility tends to be mean-reverting, and historically, readings below 40% have consistently predicted renewed market turbulence.
- In Deribit-listed options, there has been a notable increase in both trading volume and open interest in BTC calls at the $70,000 and $72,000 strikes. This likely reflects a large bull call spread that crossed the band recently. The strategy bets that prices will rise to $72,000 by the end of July.
- In ETH’s case, the late July expiration call at the $2,300 strike is the most traded stake in the last 24 hours. A call represents a bullish bet on the market.
Token talk
- Artificial intelligence token defied bearish crypto price action on Thursday, rising 3.5% since midnight as it looks to test the $2.20 resistance level, causing a rejection and subsequent decline to $1.85 on July 2.
- The rest of the altcoin market tracked bitcoin and ether, with coins including HYPE, SOL and ENA losing 1.3%-1.8% since midnight, while NEAR, JUP and DASH had bigger losses.
- CoinMarketCap’s “Altcoin Season” indicator is still range-bound, currently at 48/100 after losing its 58/100 perch on Monday as investors shifted focus back to bitcoin.
- A recent area of interest in the altcoin sphere has been memecoins, particularly tokens launched on Robinhood’s new blockchain. One, cashcat (CASHCAT), rose from relative obscurity to a $220 million market cap in the first week Robinhood Chain went live. It has since fallen back to a market cap of $91 million despite maintaining around $60 million in daily revenue.
