Crypto market strength extended into Tuesday, with bitcoin gaining 3.9% since midnight UTC to trade at $71,000, while ether (ETH) has climbed back above $2,000, a level it recently struggled to surpass.
Crypto was not alone in his rise. US stocks and precious metals too after US President Donald Trump said the war in Iran would end “very soon”. The dollar and oil gave up much of last week’s gains.
The Dollar Index (DXY) briefly traded as high as 99.7 on Monday and is now at 98.5. The cryptocurrency market is inversely correlated with the dollar, so a bitcoin breakout could be on the cards if the DXY continues to weaken for the rest of the week.
The war in Iran (which, it seems, may now be shorter than many thought) has exposed a resilience in the cryptocurrency market that was previously absent. Bitcoin had beaten stocks and precious metals since the conflict began, potentially rebuilding the asset class’s reputation as a safe-haven investment.
But he’s not out of the woods yet. Bitcoin and the broader market remain in a clear downtrend since early October, characterized by a series of lower highs and lower lows. To break that trend, Bitcoin needs to trade back towards $98,000 having established support levels along the way.
Derivatives positioning
- Open interest (OI) in futures linked to HYPE, the best-performing token of the last 24 hours, has grown 14% to $1.41 billion, according to Coinglass. OI surpassed 40 million HYPE, a level that remains close to recent lows.
- For both BTC and ETH, open interest has increased by more than 5%, outpacing gains in spot prices. This shows new capital inflows as markets recover.
- In gold tether (XAUT), OI futures continue to decline and have fallen below 110,000 XAUT, a sign that investors are rotating money out of recent best performing assets such as gold-linked assets.
- Annualized perpetual funding rates for most tokens remain slightly positive, suggesting tight dominance of bullish bets. Tokens like ZEC and SUI stand out with negative rates.
- Most major cryptocurrencies, excluding BCH, XMR, and XAUT, have seen aggressive bidding, as evident from their OI-adjusted cumulative volume deltas.
- BTC and ETH’s 30-day implied volatility indices, BVIV and EVIV, have fallen more than 4%, a sign that traders are pricing in the uncertainty following oil’s fall below $100.
- Still, on Deribit, BTC and ETH protective puts remain more expensive than bullish puts on all time frames. The positioning of the market makers is such that volatility could increase noticeably in the event of a possible BTC price movement above $75,000.
- Block flows featured demand for BTC, a volatility bet, and call spreads, a bullish strategy. In the case of ETH, traders chased risk reversals.
symbolic talk
- The altcoin market was particularly buoyant on Tuesday, with the Solana-based Jupiter (JUP) DEX token posting a double-digit gain since midnight UTC.
- Recovery token ETHFI also gained, rising 6.5% to reach its highest point since January 29.
- HYPE, the native token of derivatives exchange HyperLiquid, was more subdued, rising just 0.5% since midnight. This despite BitMEX founder Arthur Hayes calling for all-time highs of $150 in a blog post on Monday. HYPE is now trading at $34.8, and much of its 24-hour gains came early Monday, before Trump’s comments about the war.
- The best-performing CoinDesk benchmark over the past 24 hours was the bitcoin- and ether-heavy CoinDesk 5 (CD5) and CoinDesk 10 (CD10) indices, which rose 4.3%, while the DeFi Select Index (DFX) was close behind after rising 4%.
- The same cannot be said for the memecoin index (CDMEME), which finds itself at the bottom of the pack after rising just 2.6%.
