The cryptocurrency market’s rich streak of volatility extended into Friday morning, with bitcoin rising from a low of $85,200 at 1:00 am UTC to $88,000 more than five hours after the Bank of Japan raised interest rates to the highest level in 30 years.
The move marked the fourth time Bitcoin has jumped more than 2% this week, although each rally has been temporary and faded quickly as the price action resembles the choppy behavior of previous cryptocurrency bear markets.
Nasdaq 100 futures rose 0.62% during the same five-hour period that the yen fell, suggesting the rate hike was already priced in and investors were not rushing to swap risk assets for Japan’s national currency.
A Bank of Japan rate hike is often thought to be bearish for risk assets because it could make borrowing the yen more expensive and spur the demise of the carry trade, in which traders borrow cheap yen at low rates and use them to buy higher-yielding assets such as U.S. bonds, stocks and cryptocurrencies.
Derivatives positioning
- Bitcoin open interest rose faster than the price on Friday morning, showing that the move was supported by leveraged long positions rather than investors looking to cover short positions.
- The aggregate funding rate for bitcoin across all exchanges rose to 0.085%, the highest level since Nov. 21, after going negative on several occasions over the past four weeks, according to Coinalyze.
- A positive funding rate indicates a bullish environment because those who hold long positions must pay an interest rate to those who are short. The opposite occurs when financing is negative.
- The altcoin market failed to mirror bullish signals from bitcoin derivatives, with SOL and XRP open interest falling 4.4% and 2.6%, respectively, despite price movements of less than 1%. The discrepancy suggests that futures traders are slowly abandoning speculative assets.
- Funding Rates for Cardano Privacy Token they remain very depressed at -0.1987%, demonstrating a strong preference for the short side of the trade.
- Bitcoin’s long/short ratio, which compares the net number of long accounts to those that are short, shows a bullish bias as 66% of traders were long in the last four hours.
symbolic talk
- While the broader altcoin market continues to suffer, as evidenced by the decline of CoinMarketCap’s “altcoin season” indicator to new cycle lows of 14/100, ether It bucked that trend by outperforming bitcoin.
- ETH was up 1.5% against bitcoin between 2:50 am and 10:30 am, although it is worth noting that until Thursday, the ETH/BTC trading pair was in a downtrend this week.
- The relative uncertainty and choppy behavior of bitcoin has negatively impacted altcoins and several tokens began selling off in recent hours. RNDR, IMX, WLFI and ATOM fell.
- To regain strength, the altcoin market needs Bitcoin to break through a resistance level and consolidate, which would stimulate the flow of capital from Bitcoin profits to more speculative bets.
- The lack of speculation is demonstrated by the CoinDesk memecoin index (CDMEME), which is up 2.42% since midnight UTC, while the CoinDesk 20 (CD20) is up 3.68% over the same period.
