Thursday’s selloff was one of the sharpest and most destructive in crypto market history: More than $2.6 billion was liquidated as bitcoin fell to $60,000 to mark its lowest point since October 2024.
The draw led to bitcoin being the third most “oversold” in its history, according to the Relative Strength Index (RSI), a momentum oscillator that tracks market conditions. Oversold conditions of this magnitude historically precede a major pullback.
The situation brightened a bit as Asia woke up, with bitcoin jumping from $60,000 to over $65,000, while ether came off a low of $1,750 to trade back to $1,920.
Still, the broader crypto market remains in a bear market. Privacy coin zcash has lost 34% of its value over the past week, while optimism solana and ether all deal with losses of around 30%.
Traditional markets have also struggled in recent days. The Nasdaq 100 is down 6% since Jan. 28, and precious metals gold and silver are down 12% and 38%, respectively, over the same period.
Derivatives positioning
- The crypto futures market is worth less than $100 billion for the first time since March 2025 as traders continue to reduce risk as prices fall and liquidations cause wealth destruction.
- Over $2.6 billion in leveraged futures bets have been liquidated or forced closed by exchanges due to margin shortages in 24 hours. Of that, over $2.10 billion were long bets. This shows the degree of bullish leverage that was implemented around the key $70,000 support, which was breached on Thursday.
- Open interest (OI) has fallen in futures linked to all major tokens, including recent outperformer HYPE.
- Annualized perpetual funding rates for major tokens such as BTC, SOL, XRP and DOGE have turned negative as price declines triggered demand for bearish bets. The negative rates could cause arbitrageurs to resort to reverse cash and carry bets.
- Bitcoin’s annualized 30-day implied volatility surged to nearly 100% late Thursday as traders scrambled to buy puts, with some taking those bearish bets at strike prices as low as $20,000. Since then, volatility has retreated to below 70%. A similar pattern is seen in ether’s implied volatility.
- Still, bitcoin and ether short-term put options continue to trade at a volatility premium of 20 or more points to calls, a sign of persistent downside concerns. Putty also remains more expensive in the long run.
- Options linked to BlackRock’s IBIT ETF saw record activity on Thursday as traders rushed to buy puts. The one-year bias rose to over 25 points, reflecting a massive premium for put options, indicating peak fear.
Token talk
- The altcoin sector presented a few unlikely winners despite the broader market decline on Thursday. Privacy focused decree up 31% in 24 hours, seemingly unfazed by the carnage as it added to a rally that has lifted it from $17.4 to $24.2.
- HyperLiquid’s HYPE token continues to perform well, relatively speaking, as it remains up 11% this week despite a 4% drop in the past 24 hours.
- XRP was one of the most volatile altcoins, falling more than 30% before jumping 21%. Trading volume topped $14 billion, a 143% increase over 24 hours.
- The CoinDesk 20 (CD20) and CoinDesk 80 (CD80) were both down around 6% over the past 24 hours, but the worrying corner of the market was DeFi, with the DeFi Select Index (DFX) underperforming the broader market, down more than 10%.
- CoinMarketCap’s “altcoin season” indicator is now at 24/100, down from Wednesday’s high of 32/100, suggesting investors are seeking safer, less volatile assets like bitcoin or stablecoins.
