The crypto market compounded a negative week with a continued decline on Friday. Bitcoin dropped to $100,600 and ether is languishing at $3,270.
The move appears to be in line with the broader crypto market trend of late, which has seen BTC lose 18% of its value over the past 30 days. Both the CoinDesk 5 Index (CD5) of the largest, most active tokens and the broader CoinDesk 20 Index (CD20) have lost about 3% in the past 24 hours.
The fallout can still be attributed to comments from the Federal Reserve earlier this week that hinted at a potential cooling of the rate-cutting cycle, causing the US dollar to rise and risk assets to fall.
The altcoin market, with the exception of AI tokens, is underperforming bitcoin, with the “altcoin season” index at 22/100, the lowest in more than 90 days.
Derivatives positioning
By Saksham Diwan
- The BTC futures market reflects continued caution and low conviction.
- Open Interest (OI) is showing a slow but steady downward trend, settling at $24.91 billion. That’s down from $26 billion last week, an indication that traders are reducing leverage.
- Three-month annualized basis is low at 3%-4% and funding rates are below 10% annualized across major exchanges.
- Deleveraging and suppressed derivatives metrics combine to reinforce a general environment of low profitability and a lack of strong directional commitment from the futures side.
- The BTC options market, on the other hand, is showing mixed but strongly bullish signals.
- Despite short-term pullbacks in the implied volatility (IV) term structure, indicating near-term volatility, the trade bias is decisively on the upside.
- This is confirmed by 24-hour put/call volume leaning 64%-35% in favor of calls and a one-week 25-delta bias of 10%, meaning traders are paying a clear premium for very short-term upside exposure.
- Bitcoin’s price decline produced $601 million in liquidations over the past 24 hours, with 65% of losses borne by longs, confirming the impact of forced selling. Crucially, with the current BTC price around $101,000, the psychological $100,000 level is now reinforced by several $30 million long liquidation walls, positioning it as a strong support level that is likely to be aggressively defended by the market.
Token talk
By Oliver Knight
- The altcoin market faced more downward pressure on Friday, led by a 5% drop and a decrease of 3.5% for ether .
- Both tokens are now approaching critical levels of support that provided short-term relief on November 4. A break below these levels would signal continuation to the downside.
- CoinMarketCap’s “altcoin season” index is at 22/100, the lowest in more than 90 days, as traders move out of tokens lacking liquidity ahead of a potential selloff.
- Last month’s leverage-inspired drawdown presented several vulnerabilities with altcoin order books, particularly how a lack of resting limit orders can cause dramatic spikes when volatility rises, subsequently prompting a wave of liquidations on derivatives exchanges.
- Another metric that may worry bulls is that the Average Relative Strength Index (RSI) indicator is at 49.52/100, no longer oversold as it was earlier this week. This means that the market is now neutral and is unlikely to bounce anymore.
- However, the altcoin market is clinging to a glimmer of hope heading into the weekend: the AI sector is booming.
- FET is up 23% over the past 24 hours and NEAR is close behind with a 22% gain. Volume profiles for both tokens suggest retail participation with significant flows on Binance and Kucoin.
