Bitcoin and ether remain in bearish territory after a bruising weekend that took both assets to multi-month lows of $93,400 and $3,050.
The selloff confirmed a downtrend, with a series of lower highs and lower lows now present across multiple time frames.
If BTC falls to $92,840, it would trigger a $62 million liquidation pocket, which would likely send the price down to around $87,500 – a support level that dates back to March.
The backdrop behind the recent slide has been a change in expectations for the Federal Reserve’s interest rate cut cycle, with a now 50% chance for a cut in December.
Lower rates are seen as favorable for risky assets like bitcoin and ether because it makes holding the dollar less profitable.
Positioning of derivative products
- Capital continues to leave the crypto market, as indicated by the continued decline in open interest (OI) on futures contracts tied to most major tokens, including BTC and ETH, over the past 24 hours.
- The OI on ZEC and LTC futures fell by over 6% and 10%, respectively.
- XRP and ADA are the only coins with an OI increase of just over 1% in 24 hours.
- The BTC options market listed on Deribit continues to show a bias towards puts, reflecting a bearish outlook, with initial volatility exceeding 50% annualized. ETH options are also showing a bearish mood.
- Iron condor and BTC strangle strategies dominated block flows on Deribit. In the case of ETH, call schedule spreads accounted for over 50% of the flow.
Symbolic discussion
- The altcoin market has been subdued over the past 24 hours after a violent sell-off on Friday that extended into the weekend.
- Several of the largest tokens saw a moderate rally on Sunday, setting the stage for marginal 24-hour gains, although most remain down more than 10% over the past week.
- The lack of liquidity caused last week’s pullback, leading to inflated moves to the downside. Solana fell to a five-month low of $135 while ether traded a tick above $3,000, eroding all gains since July.
- Even privacy coins have cooled off despite a months-long rally that saw zcash rocket to $670 from $41.
- The bearish price action in the altcoin market is demonstrated by the Fear and Greed Index, which shows “extreme fear” at 17/100, its lowest since April.
- CoinGlass’ average Relative Strength Index (RSI) indicator sits in the neutral zone at 43.52/100, suggesting that the market is not quite in oversold territory despite most tokens suffering losses over the past month.
