The crypto market is trading back in familiar territory after a brief surge to its highest point since early February on Friday.
Bitcoin is trading a hair below $75,000, while ether (ETH) is at $2,300, both significantly lower than Friday’s highs of $78,300 and $2,460.
One reason traders are bullish is that the bitcoin futures market on the CME, a venue favored by institutions, closed at $77,540 on Friday and opened at $74,600 to create the “CME gap” spanning 3.8% to the upside. A similar gap occurred last week and was filled before the end of the day on Monday.
The first steps have been taken: Bitcoin is up 1.5% since midnight UTC, suggesting sentiment has warmed up after a volatile weekend.
The market tumbled over the weekend when shipping through the Strait of Hormuz ground to a halt after opening on Friday. The renewed shutdown led to a jump in the price of crude oil from $78 to $88 per barrel.
This weighed on risk assets with Nasdaq 100 and S&P 500 futures both down 0.59% since midnight.
Derivatives positioning
- Across the market, crypto open interest (OI) held steady near $120 billion over the past 24 hours. Trading volume, on the other hand, increased by 30%, indicating an increase in activity without a corresponding increase in new positions. It potentially points to increased turnover, short-term positioning, or traders rotating risk rather than deploying new capital.
- OI in solana (SOL), bitcoin ether (ETH) and XRP (XRP) remained largely stable. OI in HYPE futures fell by 3% concurrently as the price fell, suggesting capital outflows. Elsewhere, OI in AVAX and SP 500 perpetuals rose by 6% to 10% respectively.
- OI in AAVE futures surged to an all-time high of 3.46 million tokens as collateral damage from the weekend exploit of KelpDAO led to rapid withdrawals from the Aave lending platform.
- Funding rates linked to BTC, ETH and several other tokens turned negative, indicating a bias for short positions that would benefit from a price drop in these tokens.
- BTC and ETH options on Deribit continue to trade more expensive than calls, a sign of continued downside concerns.
- Block streams highlighted the bias for BTC call spreads, which are directional bets, and ether straddles, a volatility play.
Token talk
- The altcoin sector was rocked by a $292 million takeover of Kelp DAO’s rsETH token over the weekend, leading to contagion risk across the DeFi market.
- Total Value Locked (TVL) on Aave fell from $26.5 billion to $17.5 billion as a result, with the exercise triggering fears of bad debt hitting Aave’s WETH pool, triggering heavy withdrawals and a liquidity crisis.
- Aave’s token, AAVE, rose 2.2% on Monday after plunging 22% on Saturday.
- The bitcoin-dominant CoinDesk 20 ( CD20 ) Index rose 1% on Monday, outperforming the altcoin-weighted CoinDesk 80 ( CD80 ) and DeFi Select Index ( DFX ), which rose 0.6% and 0.9%, respectively.
- One particularly volatile token is celestia (TIA), which remains down 3.9% over the past 24 hours, even after gaining more than 4% since midnight.
- CoinMarketCap’s “Altcoin Season” indicator is at 36/100, showing investor preference for bitcoin after Friday’s brief breakout.
