Bitcoin while it is a little in the green, it can be a shock. The major cryptocurrency has gained less than 0.5% since midnight UTC, and strong moves towards $80,000 are likely to encounter resistance.
That’s because short-term holders have a cost basis around that price, Luke Deans, a senior research associate at Bitwise, told CoinDesk. A move above can convince them to take profits and sell, limiting any advance.
Another headwind may appear in the form of PCE inflation in the US in March, which comes down as oil prices keep pressure on risk assets. West Texas Intermediate crude has risen to as high as $110 and reduced traffic through the Strait of Hormuz has kept energy markets fragile.
Wednesday’s decision by the Federal Reserve to keep the federal funds rate steady is also weighing on the market. Specifically, four dissenting votes, the most since 1992, with one governor pushing for a cut and three regional presidents opposing the statement’s suggestion that the Fed resume easing.
Deans also said that altcoins remain tied to bitcoin, with 180-day correlation and beta percentiles near 97% and 99%. This means tokens can move like leveraged bitcoin trades today.
“Beneath the surface, conditions typically associated with rising volatility appear to be forming,” Deans said. “Liquidity remains muted, with profit and loss taking largely offsetting each other, reflecting a lack of directional conviction.”
In these environments, he said, price movements are often necessary to unlock new liquidity.
Derivatives positioning
- Across the market, futures open interest (OI) has fallen over 2% to $119 billion in 24 hours. However, trading volume has increased 26% to $208 billion. The combination indicates that positions are being closed and capital is fleeing the market, a sign of risk aversion.
- Over $500 million in leveraged bets have been liquidated by exchanges, most of which are longs or bullish positions. The market weakness on the back of rising bond yields has clearly caught bulls off guard.
- OI is down 2% in bitcoin futures and and 1.7% in ether. Similar declines are seen across most majors, except DOGE, whose OI is still hovering at six-month highs.
- With the exception of XMR, XLM, TRX and CC, most coins, including the two largest, have seen sellers bid more than buyers lift offers, leaving the 24-hour cumulative volume delta in the negative. In short, sellers are more aggressive, suggesting the potential for deeper price declines.
- Bitcoin’s 30-day implied volatility index, BVIV, has fallen to 41%, extending its decline from a February high of 97%. Right now, the index is at its lowest since January 29. Once again, this tells a story of a market that has become desensitized to adverse macro developments such as rising bond yields and elevated oil prices. Ether’s volatility index shows a similar pattern.
- On Deribit, BTC and ETH protective puts remain more expensive relative to calls. The large concentration of open interest in bitcoin’s $80,000 call has created a long (positive) gamma dynamic, suggesting that market makers may sell rallies to and above this level to hedge their books. This could slow down potential recoveries.
- Bitcoin’s term structure shows less stress in the short term, with traders pricing in more uncertainty further out rather than in the immediate future.
- Blockstreams featured a large BTC put spread involving strikes $72,000 and $65,000, according to Amberdata. The strategy shows expectations of a renewed price decline to $65,000 or lower.
Token talk
- Memecoin launchpad Pump.fun is adding a way for creators to send fees to charities as its PUMP token trades lower following a major change to its monetization policy.
- The feature, called Charity Coins, allows coin administrators to select a verified charity in Pump.fun’s creation fee settings. The platform that leverages it, Donate.gg, supports more than 10,000 charities.
- The goal is to reduce disputes between merchants and coin administrators when creating a token around a charitable cause. The platform’s current main fundraiser is currently at $12,800 for St. Jude Children’s Research Hospital.
- Pump.fun also said it will stop using all revenue to buy and burn PUMP. Instead, it will now send 50% of future net sales to automatic buybacks and burns for one year, keeping the rest for hiring, product work, marketing and potential deals.
- The changes come during a tough stretch for PUMP. The token is down more than 7% over the past 24 hours, compared with a 2.2% drop in the broader CoinDesk 20 (CD20) index.
