Bitcoin consolidated after Tuesday’s jump to $76,000 along with a 33% drop in daily trading volume to $36.9 billion.
The major cryptocurrency has added just 0.4% since midnight UTC after returning to $73,500 as it looks to establish a new level of support ahead of a potential bullish breakout.
While analysts predicted a quick move to $80,000 after $72,000 was withdrawn, price action has actually been much more measured. Traders with long positions took profits and those who were forced out of short positions are waiting on the sidelines to get back in.
Volatility has also retreated in commodity gold, silver and crude oil, with the war in Iran continuing to put full risk-on mode on hold.
US stocks are beginning to experience a period of prolonged upside; Nasdaq 100 futures are up 0.66% since midnight UTC, followed by the S&P 500, which is up 0.5%.
Investors will be keeping a close eye on Wednesday’s Federal Reserve meeting because, while a rate cut is almost certain, higher inflation numbers due to the rise in oil prices and weaker US jobs numbers could affect the mood at the post-decision press conference.
Derivatives positioning
- The growth in bitcoin futures open interest (OI) on major exchanges has stalled along with slightly negative fund yields. It is a sign that traders are not adding new bullish positions and that bears are gaining a slight advantage.
- OI in ETH, XRP and SOL fell from early Tuesday highs as spot prices lost bull momentum. This suggests that traders are liquidating positions, indicating a cooling of speculative activity.
- OI in privacy-focused ZEC, which is up nearly 4% in 24 hours and 31% in a week, has risen to 1.75 million ZEC, the most since January 25th. The increase in OI validates the recent price increase.
- Funding rates for XRP, BNB and SOL have turned negative, indicating a bias for bearish short positions. Traders may be hedging against potential downside volatility after the Fed meeting.
- Bitcoin’s one-day implied volatility, or the expected price swing over 24 hours, remains steady around 50% year-on-year. This corresponds to a 24-hour movement of about 2.6%. In other words, the market does not see the upcoming Fed meeting as a significant price movement for the largest cryptocurrency.
- The same can be said about ether, solana and XRP.
- On Deribit, options market positioning looks defensive in both bitcoin and ether, with biases showing a put or bearish bias.
- Block flows contained demand for strategies with limited profit potential such as diagonal spreads for bitcoin calls and volatility bets such as straddles. In ETH’s case, traders preferred risk aversion and margin crossings.
Token talk
- The altcoin market continues to show strength with the “Altcoin Season” index hitting a six-month high. The reading of 54/100 is a far cry from early February, when it languished at 22/100.
- Privacy coin zcash (ZEC) was one of the best performing altcoins on Wednesday, adding 3.4% since midnight despite the rest of the market trading relatively flat. It has now risen by 32% in the past week.
- Decentralized finance (DeFi) lending token MORPHO also continued its rich form after rising 2.3% since midnight to add to a monthly gain of 33%.
- The best performing benchmark over the last 24 hours has been
The CoinDesk Smart Contract Platform Select Capped Index (SCPXC), with the index heavily weighted towards layer-1 tokens, is up 0.8%, while the CoinDesk Memecoin Index (CDMEME) lost ground, falling 2.7%.
