The crypto market held above a critical price support level during opening hours in Asia, with Bitcoin changing hands at $78,400 and ether at $2,290.
Since midnight UTC, other major cryptocurrencies have given up some of their gains while precious metals and US stocks have rallied, demonstrating the relative weakness of the crypto sector.
The Fear and Greed Index is at 17/100, an “extreme fear” reading, as investors begin to accept the reality that the October high was the peak of the bull market and the correction that followed was indeed a reversal into a bear market.
While some analysts say the bear market will be short-lived, with Bitcoin approaching a key price floor at $60,000, a CryptoQuant analyst said the market is weakening structurally and downside risk remains unresolved.
The only exception to the bearish sentiment is HyperLiquid’s HYPE token, which rose more than 70% last week in light of a surge in volumes on its silver futures market, suggesting participation from retail traders.
Positioning of derivative products
- Bitcoin’s 30-day annualized implied volatility remains above its 200-day simple moving average, indicating the potential for additional price turbulence ahead. The same goes for ether.
- More than $300 million in leveraged cryptocurrency futures bets were liquidated by exchanges in 24 hours. Still, notional open interest (OI) in crypto futures has stabilized at a multi-month low near $110 billion.
- Over the past 24 hours, OI futures on major coins including BTC, ETH, SOL, and XRP have declined. HYPE futures stand out with a nearly 20% increase in open interest. The gap indicates a likely capital deployment on the bull side, in anticipation of more gains in the token.
- The majors’ annualized perpetual funding rates remain slightly positive, indicating a slight bullish bias.
- On Deribit, the BTC and ETH put premiums weakened somewhat from Monday. However, put options remain more expensive over several maturities, a sign of persistent bearish expectations.
- Block flows included bitcoin strangle demand, a volatility strategy, and ether risk reversals, a low-cost hedging strategy.
Symbolic discussion
- HyperLiquid’s HYPE rallied, a gain that can be attributed to increased volumes and revenue, and much of the broader altcoin market also rebounded on Tuesday. Polygon’s POL token, along with LIT and MORPHO, saw gains of up to 13% over the past 24 hours.
- These advances follow a low-liquidity sell-off over the weekend that pushed several assets into “oversold” territory. In a low liquidity environment, where market depth is lacking, altcoins often make exaggerated moves because the demand for instant buy or sell orders cannot be met by bids and asks to rest on the order book.
- Privacy Coin Monero and zcash failed to extend their good start to the year. Both have fallen more than 20% over the past week, with an additional 3.5% decline since midnight.
- Another asset that has been immune to recent selling pressure is the Canton layer 1 blockchain CC token, which added 28% last week thanks to participation from institutional investors.
- The Canton Chain is a privacy-friendly blockchain designed for institutional finance and tokenization of real-world assets (RWA). In December, it was announced that Wall Street giant DTCC had reached an agreement with Canton to tokenize US Treasury securities on the blockchain.
