Bitcoin and ether remaining in bearish territory after a torrid weekend took both assets to multi-month lows of $93,400 and $3,050.
The sell-off acted as confirmation of a downtrend with a series of lower highs and lower lows now present across multiple timeframes.
If BTC falls to $92,840, it would trigger a $62 million liquidation pocket, which would likely bring the price down to around $87,500 – a support level dating back to March.
The background behind the latest dip has been a shift in expectations around the Federal Reserve’s interest rate cut cycle, with odds now at 50% for a reduction in December.
Declining rates are seen as favorable for risk assets such as bitcoin and ether, as it makes holding the dollar less profitable.
Derivatives positioning
- Capital continues to exit the crypto market as indicated by the continued decline in open interest (OI) in futures linked to most major tokens, including BTC and ETH, in the last 24 hours.
- OI in ZEC and LTC futures have fallen by over 6% and 10% respectively.
- XRP and ADA are the only coins with an OI increase of just over 1% in 24 hours.
- The Deribit-listed BTC options market continues to show a bias for puts, reflecting a downside outlook, with front-end volatility climbing above 50% y-o-y. ETH options are also showing a bearish sentiment.
- BTC iron condor and choke strategies dominated block streams on Deribit. In ETH’s case, call calendar spreads accounted for over 50% of the flow.
Token talk
- The altcoin market has been muted over the past 24 hours after a massive sell-off on Friday extended into the weekend.
- Several of the major tokens staged muted recoveries on Sunday, paving the way for marginal gains over 24 hours, although most remain down more than 10% over the past week.
- An absence of liquidity spurred last week’s move, resulting in inflated moves to the downside. Solana fell to a five-month low of $135, while ether traded a cross above $3,000, eroding all gains since July.
- Even privacy coins have cooled despite a month-long rally that saw zcash rocketed to $670 from $41.
- The bearish price action across the altcoin market is demonstrated by the Fear and Greed Index, which is flashing “extreme fear” at 17/100, the lowest since April.
- CoinGlass’ average Relative Strength Index (RSI) indicator is in the neutral zone at 43.52/100, suggesting that the market is not quite in oversold territory despite most tokens suffering losses over the past month.
