Bitcoin recovered after falling to $86,000, the lowest point in more than a month, on Sunday.
The rally coincided with the opening of bitcoin futures trading on the CME at 23:00 UTC. The largest cryptocurrency rose more than 2% in the subsequent nine hours before losing strength at $88,250.
Zooming out, bitcoin remains in a grueling downtrend, characterized by a series of lower highs and lower lows that started in October to create the etching of an early bear market reversal.
Sunday’s sell-off was spurred by continued risk-off sentiment from investors after a volatile week in which US President Donald Trump delivered several speeches in Davos related to Greenland, tariffs and geopolitical conflicts around the world.
That sentiment lifted precious metals gold and silver to record highs, diminishing bitcoin’s reputation as a safe haven and cementing it as a risk asset that mostly moves in sync with U.S. stocks.
Derivative positioning
By Saksham Diwan
- BTC futures open interest (OI) stabilized at $22.6 billion despite downward price volatility, signaling a pause in recent deleveraging.
- While funding rates have neutralized around 5% y-o-y across most exchanges, OKX has diverged with a -3.8% rate, reflecting localized hedging or bearish bets.
- In contrast, the 3-month annualized basis on Binance and Deribit rose up to just over 5%, suggesting that while speculative froth has settled, institutional appetite is starting to pick up during this consolidation.
- BTC options signal high conviction with a 15% one-week 25-delta bias and 58% call dominance in 24-hour volume.
- The implied volatility (IV) term structure has shifted from contango to backwardation, with short-term interest rates higher than those further out.
- Front-end volatility increased to 41.53% (January 30) compared to the decrease of approx. 39% in the middle of the curve before rising towards 47% at the end of 2026.
- This structure highlights a significant premium for short-term positioning as the market prepares for immediate price action while maintaining a bullish long-term outlook.
- Coinglass data shows $744 million in 24-hour liquidations, with a 77-23 split between longs and shorts. ETH ($273 million), BTC ($207 million) and SOL ($63 million) led the way in fictitious liquidations. The Binance liquidation heatmap indicates $88,370 as a core liquidation level to monitor in case of a price drop.
Token talk
By Oliver Knight
- As bitcoin continues to show weakness, the altcoin market showed some resilience overnight.
- Ether and xrp both rose 2.8% since midnight UTC, while privacy coins zcash and Monero increased by 6% and 3% respectively.
- The best corner of the altcoin market was metaverse tokens, with axie infinity (AXS) up more than 23%, while the CoinDesk Metaverse Select Index (MTVS) rose 6.92% since midnight to add to a year-to-date rally of 34.4%.
- The bitcoin-dominant CoinDesk 20 (CD20) Index has now lost 0.52% since the turn of the year, while the altcoin-heavy CoinDesk 80 (CD80) is in the black and is up 2.5%, showing relative strength among altcoins.
- RIVER, the native token of its namesake stablecoin protocol, has been the most prolific altcoin over the past 30 days, rising more than 2,100% after gaining another 34% over the past 24 hours.
- The “Altcoin Season” indicator is currently at 28/100, still well below September’s peak of 76/100, but significantly higher than this time last month when it was 16/100.
- A lack of liquidity and market depth since October’s $19 billion liquidation cascade means altcoin moves have been more exaggerated in both directions, leading to high numbers of liquidations during sell-offs like Sunday’s, as well as dramatic recoveries as traders navigate thin order books.
