Cryptocurrency markets fell on Tuesday, losing momentum from the start of the week and eroding gains. Bitcoin It is currently trading at $90,150, down from Monday’s high of $92,350. The CoinDesk 20 Index (CD20) fell 2.1% in 24 hours, with all members in the red.
The price action mirrors last week’s performance, when Bitcoin rose from $86,300 to $93,200 between Sunday and Tuesday before falling back to $88,000 in the second half of the week.
The difference this week is Wednesday’s Fed rate decision, with markets overwhelmingly predicting a 25 basis point rate cut. It is widely believed that interest rate cuts are beneficial for risk assets such as cryptocurrencies because holding U.S. dollars becomes less valuable.
But the odds of a rate cut have been high for weeks, meaning the possibility may already be priced in. If so, risk assets are likely to sell off on the news, as it means there are no more bullish catalysts for the rest of the year.
Derivatives positioning
- The market showed no signs of pre-Fed jitters, with BTC and ETH 30-day implied volatility indices BVIV and EVIV remaining stable.
- On Deribit, activity for June expiration puts is as low as $20,000 and calls are above $200,000. These are most likely bullish volatility trades rather than price directional trades.
- Overall, BTC and ETH puts remain more expensive than calls, block flows are characterized by risk reversals, and Bitcoin’s put diagonal spreads are larger.
- In the case of ETH, flows include call spreads and risk reversals.
- As for futures, most major coins, including BTC and ETH, saw declines in open interest (OI). In the case of BCH, the drop was 8%.
- ZEC’s OI increased by 16% to 2.3 million ZEC, approaching the record high of 2.32 million ZEC on December 4.
token talk
- The altcoin market continues to slump, with multiple tokens underperforming Bitcoin as investor interest in speculative assets falls to cycle lows.
- HYPE fell 8.6% in 24 hours, while STRK, QNT and KAS fell 5.7%-6.3%.
- CoinMarketCap’s “Altcoin Season” indicator is also stuck at a cycle low of 18/100, a far cry from the 78/100 hit on September 20.
- Bitcoin has fallen about 20% in the past 90 days. Still, this pales in comparison to the altcoin space, where more than half of the top 100 coins by market capitalization are down more than 40%.
- Among the worst-performing coins were artificial intelligence-focused FET, which is still reeling from a public feud with Ocean Protocol and token sale accusations, After a round of layoffs and a lack of any on-chain activity, the company fell 67% in 90 days.
- A few coins bucked the trend, especially the privacy coin zcash. and dash it is worth mentioning that BNB and Despite the broader market weakness, it remained relatively flat.
