The cryptocurrency market was volatile Tuesday night after Strategy (MSTR) President Michael Saylor declared that his company could sell bitcoin. to pay dividends from the STRC instrument, causing a short-lived panic in the price action.
However, BTC regained the $82,000 mark during European morning hours on Wednesday, having risen around 1.3% since midnight UTC, mainly driven by a weakening US dollar, which is down 0.5% over the same period.
The dollar’s weakness comes after US Secretary of State Marco Rubio said the US had “achieved its military objectives” and was “not interested in further escalation, which would also cause a drop in oil prices.”
Risk assets like the cryptocurrency market were set to react well to the news, as it means the Federal Reserve could begin a cycle of rate cuts, rather than whatever hike was mooted at the start of the war to combat inflation.
Ether (ETH) is trading at $2,380 having risen around 0.8%, although crucially it remains below the April 17 high of $2,460 after underperforming bitcoin.
Derivatives positioning
- Positioning in bitcoin futures remains elevated, with open interest hovering around an all-time high of 800,000 BTC. Still, perpetual funding rates remain stable or slightly positive, suggesting the market is neither overheated nor supersaturated. That’s a healthy sign that the market is being driven up by steady demand, rather than speculative fervor.
- The same can be said for the ether market, where open interest has risen to 14.5 million ETH, the highest since March 28.
- The most notable among the top five is SOL, where open interest increased by 6% in the last 24 hours to 61.79 million tokens. However, if we zoom out, that level still marks only a three-week high.
- Speaking of the broader market, TON is seeing strong capital inflows, as evidenced by a 6% increase in open interest to 213 million tokens. Open interest has reached a new peak for the third day in a row. But once again, financing rates remain low and barely positive, pointing to continued hedging by cash buyers.
- The broader picture has turned from bearish to bullish in the last 24 hours. At the time 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 stark contrast to the previous day, when most coins had a negative CVD.
- Bitcoin and Ethereum volatility compression continues, with the ETH index, EVIV, falling to 55% today, a level last seen on January 31. The persistent decline supports the bullish spot price action.
- On Deribit, bitcoin call options, or bullish bets, with strike prices ranging from $82,000 to $115,000 were among the most traded contracts in the past 24 hours. However, risk reversals still show a slight overall selling bias across time frames.
symbolic talk
- The altcoin market showed signs of strength on Wednesday with a host of assets posting double-digit gains. Among them were the popular privacy coins zcsah (ZEC) and dash (DASH), which have risen 14% and 16% respectively since midnight UTC.
- With no clear information catalyst, it appears investor confidence is driving the rally after a period of consolidation between early February and early May, which led to persistent oversold conditions.
- The altcoin-dominant CoinDesk 80 Index (CD80) was the best-performing benchmark on Wednesday, up 3.5%, while the CoinDesk 20 (CD20) lagged around 1.5%.
- The memecoin rally from earlier in the week is now starting to cool down with capital rotating into other sectors, particularly components of the CoinDesk Computing Select Index (CPUS), which include chainlink. and bittensor (TAO), which rose 3.1% and 2% respectively.
