The cryptocurrency market is trading back in familiar territory after a short-lived spike that hit its highest point since early February on Friday.
bitcoin is trading below $75,000, while ether (ETH) is at $2,300, both significantly below Friday’s highs of $78,300 and $2,460.
One reason for traders to be optimistic is that the bitcoin futures market on the CME, a venue favored by institutions, closed at $77,540 on Friday and opened at $74,600 to create a “CME gap” spanning 3.8% upside. A similar void occurred last week and was filled before the end of the day on Monday.
The first steps have been taken: Bitcoin gained 1.5% since midnight UTC, suggesting sentiment is improving after a volatile weekend.
The market plunged over the weekend when shipping through the Strait of Hormuz was halted after Friday’s opening. The new closure caused a jump in the price of crude oil from $78 to $88 per barrel.
This affected risk assets, with Nasdaq 100 and S&P 500 futures falling 0.59% since midnight.
Derivatives positioning
- Across the market, cryptocurrency open interest (OI) remained stable near $120 billion over the past 24 hours. Trading volume, on the other hand, increased by 30%, suggesting an increase in activity without a corresponding increase in new positions. This potentially points to increased rotation, short-term positioning or traders rotating risk rather than deploying fresh capital.
- OI in solana (SOL), bitcoin ether (ETH) and XRP (XRP) remained broadly stable. The OI in HYPE futures decreased by 3% as the price fell, pointing to capital outflows. Elsewhere, the OI of perpetual securities AVAX and SP 500 increased by 6% and 10%, respectively.
- OI in AAVE futures hit a record high of 3.46 million tokens as collateral damage from the KelpDAO weekend exploit led to rapid withdrawals from the Aave lending platform.
- Funding rates tied to BTC, ETH, and several other tokens turned negative, indicating a bias toward short positions that would benefit from a price drop in these tokens.
- BTC and ETH options on Deribit continue to trade more expensive than call options, in a sign of persistent bearish concern.
- Block flows were skewed for BTC call spreads, which are directional bets, and ether spreads, a volatility play.
symbolic talk
- The altcoin sector was rocked by a $292 million exploit of the Kelp DAO token rsETH over the weekend, raising contagion risks across the DeFi market.
- As a result, the total value locked (TVL) on Aave fell from $26.5 billion to $17.5 billion, and the exploit raised fears that bad debts would hit Aave’s WETH pool, leading to heavy withdrawals and a liquidity crisis.
- Aave’s token, AAVE, rose 2.2% on Monday after falling 22% on Saturday.
- The bitcoin-dominant CoinDesk 20 Index (CD20) advanced 1% on Monday, outperforming the altcoin-weighted CoinDesk 80 (CD80) and the DeFi Select Index (DFX), which rose 0.6% and 0.9%, respectively.
- One particularly volatile token is celestia (TIA), which is still down 3.9% in the last 24 hours, even after being up more than 4% since midnight.
- CoinMarketCap’s “Altcoin Season” indicator is at 36/100, demonstrating investor preference for bitcoin after Friday’s brief breakout.
