The crypto market fell on Tuesday, losing momentum earlier in the week and eroding gains. Bitcoin is currently trading at $90,150, down from Monday’s high of $92,350. The CoinDesk 20 Index (CD20) lost 2.1% in 24 hours, with all members falling.
The price action reflects 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 Federal Reserve interest rate decision, with the market overwhelmingly pricing in a 25 basis point cut. The reductions are generally seen as bullish for risky assets like cryptocurrencies as the dollar loses value to hold.
But the likelihood of a rate cut has been high for weeks, meaning the possibility is likely already priced in. If so, risk assets could sell off following the news, as it would mean there are no more bullish catalysts for the rest of the year.
Positioning of derivative products
- The market shows no signs of nervousness ahead of the Fed, with the BTC and ETH 30-day implied volatility indices, BVIV and EVIV remaining stable.
- On Deribit, activity is seen in June expiry call options for strike prices as low as $20,000 and calls above $200,000. These are likely bullish volatility plays and not directional price trades.
- Overall, BTC and ETH puts remain more expensive than calls, with block flows exhibiting risk reversals and diagonal Bitcoin put spreads.
- In the case of ETH, the flows included call spreads and risk reversals.
- When it comes to futures, most major tokens, including BTC and ETH, have seen a decline in open interest (OI). In the case of BCH, the drop was 8%.
- ZEC OI increased by 16% to 2.30 million ZEC, approaching the record of 2.32 million ZEC from December 4.
Symbolic discussion
- The altcoin market continues to decline, with several tokens underperforming bitcoin as investor appetite for speculative assets plunges toward cycle lows.
- HYPE lost 8.6% in 24 hours while STRK, QNT and KAS are down 5.7% to 6.3%.
- CoinMarketCap’s “altcoin season” indicator is also at the cycle low of 18/100, a far cry from September 20, when it exceeded 78/100.
- Over the past 90 days, bitcoin has fallen approximately 20%. Yet this figure is dwarfed by the altcoin sector, with more than half of the top 100 tokens by market cap sliding more than 40%.
- The worst-performing tokens include AI-focused FET, which is still reeling from a public spat with Ocean Protocol and accusations of token sales, and which fell 67% in 90 days following a series of layoffs and the absence of any on-chain activity.
- A handful of tokens have resisted the downtrend, including privacy coins zcash. and rush and a deserved mention goes to BNB and which remained relatively stable despite general market weakness.
