The crypto market is facing one of its sternest tests yet, with the bitcoin price breaking below the crucial $98,000 level of support following a wave of sell pressure in a low-liquidity environment.
The sell-off prompted more than $1.1 billion in liquidations, about half of which occurred on bitcoin trading pairs, according to CoinGlass.
The altcoin sector performed worse, with ether dropping by 9% in 24 hours while a number of altcoins were dealt double-digit moves to the downside. The CoinDesk 20 Index slid 8% with even the best performing, , losing 3%.
Crypto’s plunge coincided with a sell-off in equities. Nasdaq futures (NQ) lost 2.95% of their value over the past 24 hours.
Derivatives positioning
By Omkar Godbole
- Bitcoin’s 30-day implied volatility index, BVIV, which spiked to annualized 50%, during the Asian hours, has fallen back to 47.8% even though the spot price remains near daily lows of around $97,000.
- This suggests that despite the recent sell-off, there is no panic buying of options, indicating a more measured market response.
- Ether’s volatility indexes paint a similar picture.
- Open interest (OI) in futures tied to BTC remains flat while OI in ETH, SOL, XRP, SUI, ADA, LINK, UNI and most other tokens has declined by over 5% in a sign of capital outflows.
- On the CME, ether futures’ premium has dropped to 4.26%, the lowest since April, while BTC remains relatively elevated above 5%. It’s a sign of reduced demand for ETH relative to BTC, even though the ETH price has risen against BTC.
- The market swoon boosted demand for BTC and ETH puts on Deribit. Block flows in BTC featured put spreads and risk reversals. In ETH’s case, put spreads and put diagonal calendar spreads dominated flows.
Token talk
By Oliver Knight
- The altcoin market was decimated by a low liquidity sell-off on Friday as ether slid more than 9% in 24 hours and tokens including aave , and lost more than 10%.
- More than $1.1 billion worth of derivatives positions were liquidated during the same period, $510 million of which was attributed to bitcoin, according to CoinGlass.
- Several altcoins have now fallen to multi-month lows. Aave is now trading at its lowest point since May and ETH at the lowest since July.
- The altcoin market will be depending on whether bitcoin, the market’s anchor, can wrangle its way out of danger and back above the $98,000 level of support.
- Failure to do so would confirm a downtrend and potential bear market reversal from October’s high of $126,000.
- There was one glimmer of hope for altcoins: the privacy coin sector. Zcash and monero were both in the green on Friday as they defied market pressure.
- ZEC is now up by more than 1,000% since August as investors go full circle, back to a narrative that is centered on libertarian politics over speculative gains.
