The crypto market is facing one of its toughest tests yet with bitcoin price breaking below the crucial support level of $98,000 after a wave of selling pressure in a low liquidity environment.
The selloff brought more than $1.1 billion in liquidations, about half of which occurred on bitcoin trading pairs, according to CoinGlass.
The altcoin sector underperformed with ether down 9% in 24 hours, while a number of altcoins were assigned double-digit moves to the downside. The CoinDesk 20 index fell 8% with even the best performers, loses 3 percent
Crypto’s plunge coincided with a selloff in stocks. Nasdaq futures (NQ) have lost 2.95% of their value over the past 24 hours.
Derivatives positioning
By Omkar Godbole
- Bitcoin’s 30-day implied volatility index, BVIV, which rose to an annualized 50% during Asian hours, has fallen back to 47.8%, although the spot price remains close to daily lows of around $97,000.
- This suggests that despite the recent sell-off, there is no panic buying of options, indicating a more measured market response.
- Ether’s volatility index paints a similar picture.
- Open interest (OI) in futures linked to BTC remains flat, while OI in ETH, SOL, XRP, SUI, ADA, LINK, UNI and most other tokens have fallen by over 5% as a sign of capital outflows.
- On the CME, ether futures’ premium has fallen to 4.26%, the lowest since April, while BTC remains relatively high above 5%. It is a sign of reduced demand for ETH relative to BTC, even though the ETH price has increased relative to BTC.
- The market swoon increased the demand for BTC and ETH on Deribit. Block flows in BTC highlighted put spreads and risk aversion. In ETH’s case, flows dominated put spreads and diagonal calendar spreads.
Token talk
By Oliver Knight
- The altcoin market was decimated by a low liquidity sell-off on Friday like ether slipped more than 9% in 24 hours and tokens including aave , and lost more than 10 per cent.
- More than $1.1 billion in derivatives positions were liquidated during the same period, of which $510 million was attributed to bitcoin, according to CoinGlass.
- Several altcoins have now fallen to multi-month lows. Aave is now trading at its lowest point since May and ETH at its lowest since July.
- The altcoin market will depend on whether bitcoin, the market’s anchor, can scramble out of danger and back above the $98,000 support level.
- Failure to do so would confirm a downtrend and potential bear market reversal from the October high of $126,000.
- There was a glimmer of hope for altcoins: the privacy coin sector. Zcash and Monero both were in the green on Friday as they defied market pressure.
- ZEC is now up more than 1,000% since August as investors come full circle back to a narrative centered on libertarian politics over speculative gains.
