The crypto market plunged towards April lows on Friday with bitcoin and ether both drop about 10% in 24 hours.
BTC recently traded around $82,200 with ETH near $2,700. The altcoin market fared worse than the major cryptocurrencies, with several tokens falling as much as 20%. The CoinDesk 20 Index (CD20) fell 10%, while the CoinDesk 80 Index of second-largest tokens lost 12%, with all members in negative territory.
The sale was partly due to the liquidity crunch that occurred during October’s divestment and liquidation event. Recently, CoinDesk Research revealed that liquidity was still tight after the crash, paving the way for more violent price swings.
It wasn’t just crypto that felt the pressure. U.S. stocks have also fallen, with the Nasdaq 100 now trading 9.4% below its Oct. 31 record.
Derivative positioning
- Bitcoin’s 30-day implied volatility index, BVIV, has topped 64%, extending this month’s rise.
- The Ether Volatility Index has risen to 87%, the highest since April 10th.
- Both moves indicate increasing uncertainty in the market and increasing demand for options as spot prices fall.
- BTC’s open interest (OI) crashed to 700K BTC from 752K BTC in a day as the drop shook out bullish leverage bets. According to one analyst, some traders “catch” – or buy futures in – a falling market, which can be compared to catching a falling knife.
- OI has collapsed across the board in the past 24 hours, with DOGE, ENA, ASTER seeing declines of over 15%.
- On Deribit, BTC and ETH options continue to show a put bias.
- In BTC, put spreads account for 46% of the total block flow of pat 24 hours with put diagonal spread in a distant second. ETH flows show a similar profile.
- Some traders have picked up deep out-of-the-money IBIT puts at the $15 strike. (yes you read that right).
Token Talk
By Oliver Knight
- The altcoin market was dealt another brutal blow on Friday as several tokens fell to multi-month lows.
- The Fear and Greed Index blinked at 11/100, the lowest since CoinMarketCap began tracking it in June 2023.
- , , , and all lost between 16% and 18% of their value over the past 24 hours as traders sold into an incredibly illiquid market.
- Bitcoin and ether were not immune, falling around 10% each, although the average crypto relative strength index (RSI) is currently in “oversold” territory, meaning the market may be due for a relief rally.
- While the broader market was dealing with a massive selloff, a few traders managed to shell out millions of dollars by poaching base founder Jesse Pollak’s creator coin, JESSE. Two of the dealers made a combined $1.3 million by buying tokens in the same block the token was staked, according to Arkham Intelligence.
