The crypto market fell on Tuesday, losing momentum at the beginning of the week and eroding gains. Bitcoin currently trading at $90,150, down from Monday’s high of $92,350. The CoinDesk 20 Index (CD20) has lost 2.1% in 24 hours with all members falling.
The price action mirrors last week’s performance, when bitcoin rose from $86,300 to $93,200 between Sunday and Tuesday before falling back to $88,000 in the latter half of the week.
This week, the difference is Wednesday’s rate decision from the Federal Reserve, with the market overwhelmingly predicting a 25 basis point cut. Reductions are generally seen as bullish for risk assets like cryptocurrencies because the dollar becomes less valuable to hold.
But the likelihood of a rate cut has been high for several weeks, meaning eventualities are likely already priced in. If so, risk assets may sell on the news because it would mean no more bullish catalysts for the rest of the year.
Derivatives positioning
- The market is showing no signs of pre-Fed jitters with the BTC and ETH 30-day implied volatility indices, BVIV and EVIV, holding steady.
- On Deribit, activity is seen in the June expiration at strikes as low as $20,000 and calls above $200,000. These are mostly likely bullish volatility plays and not directional trades.
- Overall, BTC and ETH puts remain more expensive than calls, with risk-reverse block flows and set diagonal spreads in bitcoin.
- In ETH’s case, flows included call spreads and risk reversals.
- As for futures, most major tokens, including BTC and ETH, have seen a drop in open interest (OI). In BCH’s case, the drop was 8%.
- ZEC’s OI is up 16% to 2.30 million ZEC, coming close to the record of 2.32 million ZEC on December 4th.
Token talk
- The altcoin market continues to decline, with several tokens underperforming bitcoin as investor appetite for speculative assets falls to cycle lows.
- HYPE lost 8.6% in 24 hours, while STRK, QNT and KAS are down 5.7%-6.3%.
- CoinMarketCap’s “altcoin season” indicator is also resting at cycle lows of 18/100, far from its September 20 peak of 78/100.
- Over the past 90 days, bitcoin has fallen by about 20%. Even so, it is overshadowed by the altcoin sector, where more than half of the top-100 tokens by market capitalization slide above 40%.
- The worst-performing tokens include AI-focused FET, which is still reeling from a public spat with Ocean Protocol and allegations of token sales, and which is down 67% in 90 days after a round of layoffs and lack of onchain activity.
- A handful of tokens have bucked the bearish trend, notably privacy coin zcash and line and a deserved mention goes to BNB and which has remained relatively flat despite the broader market weakness.
