Bitcoin BTC$91,182.38 and the broader crypto market has fallen further, with the BTC The price reversed last week’s trend at $98,000.
The Asian session drove the bulk of the selling as prices began to fall at 01:15 UTC before consolidating at 07:00 UTC.
Privacy Coin Monero XMR$569.14 and rush DASH$72.29 has lost 9% and 3% respectively since midnight, as traders’ interest has cooled after a blistering start to the year.
Tuesday’s crypto market selloff reflects a move in U.S. stock index futures. Futures contracts linked to the Nasdaq 100 have fallen more than 1.9% since derivatives markets opened Sunday evening while S&P 500 futures are down 1.6%.
The negative price development can be attributed to the same nervousness that dominated the environment on Monday, with the EU and the US threatening each other with tariffs if they fail to find a solution to the situation in Greenland.
Safe-haven assets extended their rally, with gold and silver hitting record highs.
Positioning of derivative products
- Crypto futures bets worth over $360 million were liquidated by exchanges within 24 hours, with bullish bets accounting for the majority of the total.
- Bitcoin’s 30-day implied volatility (IV), as represented by the BVIV index, rebounded from 39.7% to 42%, indicating renewed demand for options or hedging instruments.
- The 30-day IV on U.S. Treasuries rose slightly from its multi-year low, but remains significantly lower than in November. A continued increase in bond market volatility could lead to risk aversion.
- DOGE, ZEC and ADA are causing the decline in open futures on most tokens, indicating capital outflows. OI in BTC futures remained flat over 24 hours.
- Nonetheless, funding rates for most major tokens remain positive, indicating a bias toward bullish exposure. Rates for ZEC and TRX are deeply negative, a sign of the dominance of bearish short positions.
- On Deribit, traders continue to value puts at a higher price than calls in both cases. BTC and ether ETH$3,108.38. This indicates lingering bearish fears.
- On the decentralized Derive platform, traders estimate a 30% chance of BTC slipping below $80,000.
Symbolic discussion
- The low-liquidity altcoin market suffered more than bitcoin as even major cryptocurrencies like ether and solana GROUND$128.73 fell by more than 3%.
- DeFi tokens AERO and SKY were hit even harder by the week’s price drop, losing over 5.5% in 24 hours.
- And while a few select traders are still turning hundreds of dollars into hundreds of thousands of dollars, the memecoin sector was deflated on Tuesday; with the CoinDesk Memecoin Index (CDMEME) posting a daily loss of 3.91%, underperforming all other benchmarks.
- The broader altcoin market now depends a lot on bitcoin’s next move. If the largest cryptocurrency begins to consolidate between $85,000 and $95,000, altcoins could stabilize, leaving some sectors to impress.
- However, prolonged volatility, for example a drop to $85,000, would spell carnage for the altcoin sector as liquidity failed to recover from October’s $19 billion liquidation cascade.
