Crypto markets fell on Wednesday after fresh airstrikes in Iran sparked risk aversion among investors. The CoinDesk 20 index fell 2.9% since midnight UTC, with all but one token falling.
Addressing NATO leaders, US President Donald Trump declared the ceasefire “over” and said negotiating with Iran is a “waste of time,” although talks are continuing, according to media reports.
U.S. Central Command said it attacked more than 60 small vessels of the Islamic Revolutionary Guard Corps to prevent them from disrupting international shipping, and Iran retaliated with attacks on Kuwait and Bahrain.
The Dollar Index (DXY) rose as rekindled tensions are likely to stoke inflation concerns. bitcoin and ether (ETH), the two largest cryptocurrencies, fell more than 2%.
There were steeper losses in the more illiquid altcoin sector, as JUP, ETHFI and PUMP lost more than 5%.
U.S. stocks also took a hit. Nasdaq 100 Index Futures and S&P 500 Index Futures fell as much as 1.5%.
Derivatives positioning
- Despite bitcoin’s drop to $62,000, it’s still up 6% this month and there’s good news on the derivatives front: traders don’t appear to be shorting the rally. Open interest (OI) in futures has fallen to 730,000 BTC from over 740,000 BTC a day ago.
- Ether is not doing so well. Open interest has remained stable at around 13.95 million tokens despite the drop in spot price leading to bet liquidations worth $90 million. BTC liquidations in 24 hours total just over $100 million.
- The Canton Network CC token sell-off has accelerated, with the token price falling to its lowest level since January just as futures open interest rises to a two-week high. This combination points to the possibility of traders taking advantage of the decline, especially as funding rates remain deeply negative, close to -20%.
- Broadly speaking, bearish control has intensified on major cryptocurrencies including BTC and ETH, as indicated by their negative 24-hour OI-adjusted cumulative volume delta. A negative reading indicates that the price action is being driven by traders placing market orders instead of passive limit orders.
- The latest drop in BTC and ETH appears to have spurred demand for hedging options, as their respective 30-day implied volatility indices, BVIV and EVIV, rose for the second day in a row.
- The options bias on Deribit confirms this. The one-week bias has increased to nearly 20% in favor of puts from 16% a day ago. Put options offer protection against a price drop in the underlying asset, in this case, BTC. The same goes for ether.
- However, the 24-hour volume figures show the most activity in BTC call options at the $80,000 strike price.
symbolic talk
- The altcoin market is reeling, with $350 million of the $450 million in liquidations attributed to altcoin trading pairs, according to CoinGlass.
- Solana (SOL) is now fully back on a rally that began on July 2, trading back at $77 after challenging $84 on Monday.
- One token that counters the bearish sentiment is MORPHO. The DeFi token is up 4% since midnight, as the total value locked (TVL) on the protocol hit a record 4 million ETH this week, according to DefiLlama.
- A ray of hope for the altcoin market is that several tokens are falling back into “oversold” territory, with the average Relative Strength Index (RSI) falling to 40/100 from 47/100 on Tuesday.
