Bitcoin Daily trading volume fell 33% to $36.9 billion after jumping to $76,000 on Tuesday.
The largest cryptocurrency is up just 0.4% since rallying above $73,500 at midnight UTC as it looks to establish new support ahead of a potential bullish breakout.
While analysts predicted a rapid rise to $80,000 after $72,000 was withdrawn, the price action was actually more cautious. Traders holding long positions took profits, while those forced out of short positions waited on the sidelines to re-enter.
Commodity volatility in gold, silver and crude oil has also eased, with the Iran war continuing to put full risk-off mode on hold.
U.S. stocks are beginning to experience a prolonged period of gains; since midnight UTC, Nasdaq 100 futures are up 0.66%, followed by the S&P 500, which is up 0.5%.
Investors will be closely watching Wednesday’s Federal Reserve meeting because, while a pause in interest rate hikes is almost certain, rising inflation data due to surging oil prices and weak U.S. jobs data could affect sentiment at the post-decision news conference.
Derivatives positioning
- With funds rates turning slightly negative, Bitcoin futures open interest (OI) growth on major exchanges has stalled. This suggests that traders are not adding new bullish positions, while bears are gaining a slight advantage.
- OI for ETH, XRP and SOL fell from early Tuesday highs as spot prices lost bullish momentum. This suggests traders are closing their positions, suggesting speculation is cooling down.
- OI for privacy-focused ZEC has risen by nearly 4% in 24 hours and 31% in a week, having risen to 1.75 million ZEC, the highest level since January 25. The rise in OI confirms the recent price gains.
- Funding rates for XRP, BNB, and SOL have turned negative, indicating a bias toward bearish short positions. Traders may be hedging against potential downside moves following the Fed meeting.
- Bitcoin’s one-day implied volatility, or the expected price movement over a 24-hour period, remains stable at around 50% annualized. This corresponds to a 24-hour change of approximately 2.6%. In other words, the market does not view the upcoming Federal Reserve meeting as a major price driver for the largest cryptocurrency.
- The same goes for Ethereum, Solana and XRP.
- On Deribit, options market positioning for both Bitcoin and Ethereum looks defensive, with skews showing a bias towards puts or put options.
- The block flow is characterized by demand for strategies with limited profit potential, such as volatility bets such as Bitcoin call spreads and straddles. In the case of ETH, traders prefer risk reversals and straddles.
token talk
- The altcoin market continues to perform strongly, with the “Altcoin Season” index hitting its highest level in six months. The reading of 54/100 is a far cry from early February, when the reading was 22/100.
- Privacy coin zcash (ZEC) was one of the best-performing altcoins on Wednesday, up 3.4% since midnight, although the rest of the market was trading relatively unchanged. Now it’s up 32% in the past week.
- Decentralized finance (DeFi) lending token MORPHO has also continued its rich streak, rising 2.3% since midnight, bringing its monthly gain to 33%.
- The best performing benchmark over the past 24 hours is
The CoinDesk Smart Contract Platform Select Cap Index (SCPXC), which is heavily weighted towards Tier 1 tokens, was up 0.8%, while the CoinDesk Memecoin Index (CDMEME) was lower, down 2.7%.
