The cryptocurrency market fell back to the lower side of its range after the Federal Reserve’s decision to cut interest rates by 25 basis points.
The announcement, while bullish for long-term macro assets, had arguably already been priced in by traders ahead of the event, with long exposure quickly reduced in the hours that followed.
Now, bitcoin remains above the $88,200 support level, trading at $90,350 as it looks for a catalyst to lift it above this week’s severe resistance level of $94,500.
The altcoin market continues to show weakness as several tokens lost further ground in their respective bitcoin trading pairs.
Derivatives positioning
- BTC volatility expectations continue to fall with Fed decision out of the way. At the time of writing, the 30-day annualized implied volatility, represented by the BVIV index, was 46.95%, the lowest since November 13.
- The spread between the 30-day IVs of ether and bitcoin has increased lately, pointing to a renewed market focus on the native Ethereum token.
- The VIX has also normalized after the November peak.
- On Deribit, BTC and ETH risk reversals remain negative across all timeframes, indicating a persistent bias for puts.
- Block flows featured BTC risk reversals and call calendar spreads and risk reversals and crosses in ETH.
- In the futures market, open interest (OI) in ADA fell 10% in 24 hours, leading the OI decline in most major tokens including BTC and ETH. Capital flight points to a release of risk until the end of the year.
- Funding rates for several major tokens, excluding BTC and ETH, have turned decisively negative, a sign that traders are pursuing bearish short positions.
symbolic talk
- The altcoin market continued its negative trend on Thursday, retreating into dangerous territory as companies like ETHFI, FET, ADA, and PUMP lost over 8% in the last 24 hours.
- The liquidation occurred at the same time as the respective declines in bitcoin and ether, although the percentage loss was greater as the altcoin market remains illiquid following the cascade of liquidations in October.
- The two percent market depth on ETHFI, for example, is around $500,000 on either side of the order book, meaning that a market order above that figure would move the price by more than 2%, which considering the token has a market capitalization of $480 million is a relatively small trade.
- A handful of tokens bucked the market’s bearish trend on Thursday, including monero. which rose more than 2% as it continues to demonstrate a rich vein of form that can be attributed to the broader strength of the privacy coin.
- CoinMarketCap’s “altcoin season” index remains at a modest 19/100, a far cry from September’s high of 77/100, as investors continue to show a preference for bitcoin and ether over more speculative altcoin bets.
