The crypto market suffered another grueling sell-off on Thursday, with several altcoins facing double-digit downside moves while BTC and ETH began to challenge critical support levels.
The move appears to be a continuation of the weekend’s $500 billion bloodbath, with traders now exercising more caution to avoid another potential liquidation cascade.
Positioning of derivative products
- The BTC futures market continues to stabilize, with an Open Interest holding company worth around $25 billion. The 3-month annualized basis also remained stable, trading within a range of 5-6%. However, a notable divergence in funding rates highlights mixed sentiment in the market; Binance and OKX now have negative funding rates of -2% to -3%, while other platforms are either stable or slightly positive. This negative funding on major exchanges indicates that a large number of traders are holding short positions, suggesting some degree of bearish conviction despite the stable open interest and basis.
- The BTC options market is showing a strong bullish signal. The 24-hour Put/Call volume is now roughly balanced, indicating stable demand on both sides. However, the most significant metric is the 1-week 25 Delta Skew, which reached 12.62%, suggesting that traders are willing to pay a substantial premium for call options and are aggressively positioning for higher prices.
- Data from Coinglass shows $415 million in liquidations over 24 hours, with a 70-30 split between long and short positions. ETH ($115 million), BTC ($80 million), and Others ($43 million) were the leaders in terms of notional liquidations. Binance’s liquidation heatmap shows $110,009 as the base liquidation level to watch, in case of a price decline.
Symbolic discussion
By Olivier Knight
- Altcoins were treated another day or decimated on Thursday as several assets faced double-digit declines.
- aster and lido (LDO) have all fallen between 12% and 13% in the past 24 hours, with CoinMarketCap’s “altcoin season” index sliding to 27/100, its lowest point in over three months.
- Crypto majors BTC and ETH are still hovering around the $110,000 and $4,000 support levels, respectively, although sentiment has turned bearish after the market failed to recover from last weekend’s $500 billion wipeout.
- An outlier from Thursday’s selloff was which rose from an intraday low of $0.312 to $0.322 as it begins to show strength and signs of recovery.
- There are multiple catalysts behind the recent sell-off; notably distribution by long-term holders of Bitcoin, which has created an environment characterized by high selling pressure coupled with a lack of demand.
- Altcoins are often negative recipients of bitcoin’s decline and liquidity levels, especially after the weekend’s leverage explosion, remain low. This means that in the event of a liquidation, prices quickly remove support levels until sufficient liquidity is found to meet seller demand.
