Cryptocurrency markets held above key price support levels during the Asian trading session, with Bitcoin $78,400 and Ethereum changed hands $2,290.
Other major cryptocurrencies have given back some of their gains since midnight UTC, while precious metals and U.S. stocks have advanced, pointing to relative weakness across the cryptocurrency industry.
The Fear & Greed Index is at 17/100, with a reading of “Extreme Fear” as investors begin to accept the reality that the October high was a bull market peak and the subsequent correction was indeed a bear market reversal.
While some analysts say the bear market will be short-lived as Bitcoin approaches the key price floor of $60,000, CryptoQuant analysts say the market is structurally weakening and downside risks remain unresolved.
At odds with the bearish sentiment is HyperLiquid’s HYPE token, which has gained more than 70% over the past week as its silver futures market volume surged, indicating participation from retail traders.
Derivatives Positioning
- Bitcoin’s annualized 30-day implied volatility remains above the 200-day simple moving average, indicating the potential for more price volatility ahead. The same goes for ether.
- More than $300 million in leveraged cryptocurrency futures bets have been liquidated by exchanges within 24 hours. Nonetheless, notional open interest (OI) in cryptocurrency futures has stabilized at multi-month lows of nearly $110 billion.
- Over the past 24 hours, futures OI for major currencies including BTC, ETH, SOL, and XRP have all declined. HYPE futures performed well, with open interest increasing by nearly 20%. This divergence suggests that capital deployment may be biased towards the bullish side, anticipating more gains for the coin.
- Annualized perpetual funding rates for major currencies remain slightly positive, indicating a mildly bullish bias.
- On Deribit, BTC and ETH put option premiums weakened from Monday. However, put option prices have remained higher across multiple expirations, a sign of lingering downside expectations.
- The block flow is characterized by demand for Bitcoin ransom options (a volatility strategy) and Ethereum risk reversals (a low-cost hedging strategy).
token talk
- HyperLiquid’s HYPE is up, gains that can be attributed to increased trading volume and revenue, while the broader altcoin market also rebounded on Tuesday. Polygon’s POL token, along with LIT and MORPHO, have gained as much as 13% in the past 24 hours.
- The gains come after a weekend sell-off in low liquidity that pushed several assets into “oversold” territory. In low-liquidity environments lacking market depth, altcoins tend to experience exaggerated moves because the remaining bid and ask prices on the order book cannot satisfy the demand for immediate buy and sell orders.
- Privacy Coin Monero and change Unable to continue the strong start to the year. Both have fallen more than 20% over the past week and have fallen a further 3.5% since midnight.
- Another asset that has been immune to recent selling pressure is layer-1 blockchain Canton’s CC token, which has gained 28% over the past week amid participation from institutional investors.
- Canton Chain is a privacy-enabled blockchain designed for institutional finance and the tokenization of real-world assets (RWA). In December last year, Wall Street giant DTCC announced an agreement with Canton to tokenize U.S. Treasury bonds on the blockchain.