Cryptocurrency markets showed fragility on Friday, Bitcoin The price is trading just above the psychological support level of $70,000.
The largest cryptocurrency broke above this level on Wednesday, rising to highs of $74,000 before failing to capitalize on the lower liquidity area above and pulling back along with U.S. stocks.
The intensification of war in the Middle East has pushed oil prices to new cycle highs of $85 per barrel. Brent crude oil prices have risen about 42% since the beginning of the year. Soaring energy costs, coupled with growing uncertainty around Iran, have prompted traders to reassess Europe’s inflation outlook, with currency markets now even pricing in the possibility of an ECB rate hike before the end of the year – a sharp reversal from expectations of a rate cut in 2025.
Higher interest rates typically put pressure on Bitcoin and the broader cryptocurrency market as investors turn to safer assets that offer attractive yields without the volatility associated with riskier assets.
The altcoin market has also shown signs of weakness over the past week, according to Santiment’s social volume tracker, suggesting that social media sentiment in the speculative market is nearing rock bottom.
Derivatives positioning
- The market is consolidating as Bitcoin open interest (OI) rose to $16.16 billion from $15 billion last week, indicating a return of speculative interest.
- While retail funding remains stable in the 0% to 10% range, Binance has fallen to -2.5%, indicating a local surge in short hedging.
- The three-month basis remained at 2.7%, indicating that institutional confidence remains weak.
- Options markets have turned cautiously optimistic. The 24-hour call volume ratio has been tightened to 51/49, and the weekly 25 delta deviation has been reduced to 8% (from 15%), significantly reducing downside protection costs.
- While longer-dated implied volatility (IV) has remained stable around 50%, it has surged into large backwardation recently, suggesting traders are pricing in an immediate high-impact volatility event before a return to medium-term growth.
- Coinglass data shows that the 24-hour liquidation amount was $257 million, and the ratio of longs to shorts was 70:30. BTC ($121 million), ETH ($51 million), and other currencies ($15 million) led the way in nominal liquidations.
- The Binance liquidation heat map shows that the core liquidation level to monitor in case of price increases is $71,600.
token talk
- Decentralized finance (DeFi) tokens MORPHO and JUP led Friday’s sell-off, down 2% to 3% since midnight UTC, as traders shifted away from speculative tokens and into the U.S. dollar.
- OKX’s native OKB token has seen the biggest gains in the past 24 hours, rising 23% after trading giant Intercontinental Exchange (ICE) signed a deal with the exchange to launch tokenized stock and crypto futures products.
- KITE and RIVER were also up sharply, each up around 15% in the past 24 hours, continuing their impressive starts to the year.
- Privacy coins continue to fall, with zcash (ZEC) and decred (DCR) down 6% in the past 24 hours, with losses accelerating since midnight UTC.