Cryptocurrency markets failed to stage a meaningful recovery on Tuesday as Monday’s sell-off appeared to dent investor confidence and the market continued to be in a state of “extreme fear.”
Bitcoin is trading around $87,000, down from last week’s high of $92,350, as the broader market continues to show weakness despite hopes of a “Santa Claus bounce” in December.
The altcoin market doesn’t look much better. In the past 24 hours, several coins have fallen by more than 5%, with privacy coins experiencing the largest declines.
Bitcoin has now given back almost its entire gain from November 21 to 28, underperforming U.S. stocks. The Nasdaq Composite Index rose 6.6% during the same period.
Derivatives Positioning
- BTC, ETH, XRP, and SOL continue to experience capital outflows from the futures market. Futures open interest (OI) related to these tokens has fallen by 6% in the past 24 hours. Clearly, investor confidence has been eroded due to the market decline during the October 8 crash and the losses caused by the automatic deleveraging.
- BTC’s 90-day annualized basis (the difference between futures and spot prices) has fallen to cycle lows around 4%-5%. Ethereum’s share is close to 3%-4%.
- Bitcoin’s 30-day implied volatility index, BVIV, is rising relative to Wall Street’s VIX index, signaling heightened uncertainty in the cryptocurrency market.
- The spread between ETH and BTC 30-day Implied Volatility Index has narrowed to 21.50, the lowest level since May 8. This downward trend indicates expectations for more volatility in BTC.
- On Deribit, the put bias remains unchanged for BTC and ETH options.
- Block flow is characterized by deviations from put spread and calendar call diagonal spread strategies. In the case of ETH, traders are chasing risk reversals and bearish on spreads.
token talk
- Altcoin market continues to lag Bitcoin Tuesday, with ether and Each was down around 0.6% over 24 hours, while BTC was up 0.75%.
- Privacy coins have been hit the hardest, like zcash The decline expanded, falling 8%, down 33% from the past week.
- Monero and dash Performance was almost as bad, with losses ranging from 5% to 6% per trader, as traders appeared to be riding out the privacy coin boom, which now appears to be a blip rather than a substantial change in trader behavior.
- CoinMarketCap’s “Altcoin Season” indicator continues to stall at 24/100, suggesting that preference for Bitcoin and a handful of DeFi tokens remains, allowing investors to generate gains despite the market’s decline.
- One of the recipients of DeFi interest is SKY (formerly MKR), which rose 6.7% on Tuesday following an announcement about token buybacks.
- Another reason behind SKY’s rise is increased interest in the related USDS token (formerly DAI), which has seen its market cap grow from $7.6 billion to $9.5 billion in two months.
- USDS is the native stablecoin of the Sky ecosystem. Investors can currently earn a 4.5% yield by staking.