The crypto market was volatile late on Tuesday after Strategy (MSTR) chairman Michael Saylor declared that his company could sell bitcoin in order to pay dividends from the STRC instrument, prompting short-lived panic in price action.
BTC however regained the $82,000 mark during the European morning Wednesday having risen by around 1.3% since midnight UTC, spurred mainly by a weakening U.S. dollar, which is down by 0.5% over the same period.
Dollar weakness comes after U.S. Secretary of State Marco Rubio said America had “achieved its military objectives” and was “not interested in further escalation, leading to a drop in oil prices as well.
Risk assets like the crypto market were poised to react well to the news as it means the Fed could start a rate cutting cycle, as opposed to any hikes being floated at the start of the war to combat inflation.
Ether (ETH) trades at $2,380 having risen by around 0.8%, although it crucially remains below the April 17 high of $2,460 after underperforming against bitcoin.
Derivatives positioning
- Positioning in bitcoin futures remains elevated, with open interest hovering near a record high of 800K BTC. Still, perpetual funding rates remain flat to slightly positive, suggesting the market is anything but overheated or overcrowded. That’s a healthy sign of the market being led higher by steady demand, rather than speculative fervor.
- The same can be said for the ether market, where open interest has jumped to 14.5 million ETH, the highest since March 28.
- The standout among the top five is SOL, where open interest rose 6% over the past 24 hours to 61.79 million tokens. However, zooming out, that level still marks only a three-week high.
- Speaking of the broader market, TON is registering sharp capital inflows, as evidenced by a 6% surge in open interest to 213 million tokens. Open interest has hit a new peak for the third consecutive day. But once again, funding rates remain low and barely positive, pointing to continued hedging by spot buyers.
- The broader picture has flipped from bearish to bullish over the past 24 hours. As of writing, the OI-adjusted cumulative volume delta (CVD) for most coins, except HBAR and CC, is positive. This indicates that buyers are driving trading activity by placing more market orders than sellers, rather than relying on passive limit orders. This marks a sharp contrast to the previous day, when most coins had negative CVD.
- Bitcoin and ether volatility compression continues, with the ETH index, EVIV, falling to 55% earlier today, a level last seen on Jan. 31. The persistent decline supports bullish spot price action.
- On Deribit, bitcoin call options, or bullish bets, at strikes ranging from $82,000 to $115,000 were among the most traded contracts over the past 24 hours. Risk reversals, however, still show a slight overall put bias across time frames.
Token talk
- The altcoin market showed signs of strength on Wednesday with a slew of assets posting double-digit gains. Among those were popular privacy coins zcsah (ZEC) and dash (DASH), which are up by 14% and 16% respectively since midnight UTC.
- Without a clear news catalyst, it appears investor confidence is driving the rally after a period of consolidation between early February and the start of May, which led to persistent oversold conditions.
- The altcoin-dominant CoinDesk 80 (CD80) Index was the top performing benchmark on Wednesday, rising by 3.5% while the CoinDesk 20 (CD20) lagged it at around 1.5%.
- The early week rally in memecoins is now beginning to cool with capital rotating to other sectors, notably components of the CoinDesk Computing Select Index (CPUS) which include chainlink and bittensor (TAO), which are up by 3.1% and 2% respectively.
