The crypto market continues to face challenges as it struggles to recover from the sell-off experienced earlier this week. As of now, Bitcoin is trading at approximately , reflecting a 4% decline and bringing the price down to around $86,100. Meanwhile, Ether has also taken a hit, dropping back below the $3,000 mark with a substantial 6.7% fall over a 24-hour period.
This downturn has resulted in the CoinDesk 20 Index decreasing by 4.3%, with all index members experiencing losses. A parallel decline is seen in traditional markets, with the Nasdaq Composite suffering its second consecutive day of losses, down 2.6%. Concerns surrounding a potential AI bubble and disappointing employment data have fueled this negativity. Investors are awaiting the upcoming labor market statistics, including November’s nonfarm payrolls, with forecasts estimating around 50,000 new jobs—less than half of the previous month’s figure of 119,000. Derren Nathan, head of equity research at Hargreaves Lansdown, commented that uncertainty in these expectations adds to market volatility, especially given recent private job data that suggests potential downside risks.
The crypto sector has notably underperformed compared to equities post-October market corrections. One reason for this disparity is a prevailing lack of liquidity within the crypto market, which has led to exaggerated price movements. When liquidity is scarce, even minor fluctuations can have significant impacts on asset prices, resulting in the current downward trend.
Derivatives Positioning
- Recent data from Volmex indicates that the one-day BVIV, a gauge of expected price turbulence over 24 hours, remains above 50%. This suggests a typical daily price movement of around 2.6%, which does not seem unusual despite the upcoming economic reports.
- In a span of just 24 hours, exchanges liquidated over $660 million in leveraged futures positions, predominantly comprised of long positions, thereby eliminating bullish leverage from the market.
- The cumulative global open interest (OI) in BTC futures has surpassed 700,000 BTC, marking the highest level since November 21. An increase in OI alongside a falling spot price typically signals the emergence of bearish short positions.
- XRP’s futures OI climbed to 1.96 billion XRP, the highest figure since October 11, reflecting heightened trading activity.
- The open interest-adjusted cumulative volume delta for most major tokens has fallen, indicating significant net selling pressure across the board.
- On the Deribit exchange, BTC and ETH put options continue to command higher prices than calls, suggesting sustained concerns about further downward movements. This put premium is also influenced by institutional investors employing call overwriting strategies.
- The $85K Bitcoin put option has become particularly popular, second only to the $100K call option.
- In the context of trading strategies, BTC put diagonal spreads, put ratio spreads, and straddles have been prominent, while ETH traders have shown a preference for put butterflies.
Token Talk
- The altcoin market remains in search of a bullish catalyst after experiencing a two-month downturn. Despite the negative trend, several altcoins like ASTER, ONDO, and STRK have seen losses exceeding 10% within the last 24 hours.
- There is a flicker of optimism, however, as multiple tokens are currently in “oversold” territory according to the average crypto relative strength index (RSI). This might suggest that the market is poised for a potential bounce before the U.S. employment statistics are disclosed.
- Tokens such as XRP, SOL, and ADA are approaching critical support levels that previously served as local bottoms over the past year, sparking interest among investors despite the prevailing low sentiment.
