The crypto market recovered on Monday with bitcoin rising 2.1% since midnight UTC and ether (ETH) adding 3.1%. Stronger gains occurred in the altcoin market, with tokens such as chiliz (CHZ), and optimism registering advances of more than 6%.
Despite improving sentiment, investors remain uneasy as the conflict with Iran enters its fifth week. While Pakistan has expressed its willingness to host “meaningful” peace talks, markets are still not buying it. Brent crude jumped to $108 a barrel over the weekend, signaling deep skepticism that a resolution is near. It was trading in the low $70s before the start of hostilities.
US stock index futures responded well to Pakistan’s comments: Nasdaq 100 futures and S&P 500 futures advanced 0.25%, and the dollar index (DXY) was little changed at 100.2 points.
The cryptocurrency market remains in a bearish trend on higher time frames, characterized by a series of lower highs and lower lows dating back to October. Bitcoin has remained in the same trading range since early February, failing to break above $75,000 on the upside and below $62,800 on the downside.
Derivatives positioning
- Bitcoin futures open interest (OI) growth has stalled since hitting a nearly two-month high of 748.65 BTC on Saturday. Near-zero perpetual funding rates and negative 24-hour cumulative volume delta (CVD) suggest a bias toward bearish short positions.
- BTC OI declined noticeably during the spot price rebound from the Asian session low of around $65,000. It shows that the rally is largely spot-driven and has yet to gain support from leveraged traders.
- On Bittfinex, the number of long positions in BTC/USD reached its highest level since November 2023. Historically, this has been a contrarian indicator, coinciding with price sell-offs.
- The OI on most major tokens, including XRP, ETH, DOGE, and SOL, has remained virtually stable for 24 hours.
- AVAX and LTC stand out with double-digit percentage gains in OI futures, a sign of capital inflows. Most entries, however, appear tied to bearish bets, as indicated by their negative CVDs.
- Bitcoin’s 30-day implied volatility index is under pressure again, falling to nearly 55% after hitting 58% over the weekend. Overall, the index continues to indicate calm in the market despite the turmoil in traditional markets caused by the Iran war. Ether’s volatility index suggests the same.
- On Deribit, BTC and ETH put options continue to cost more than call options on all time frames, indicating that bearish concerns persist. Dealer gamma is predominantly positive between $65,000 and $70,000, meaning dealers could buy low and sell high, potentially keeping prices range-bound.
symbolic talk
- The CoinDesk Memecoin Index (CDMEME) and the DeFi Select Index (DFX) were the two best-performing benchmarks on Monday, rising 2.8% and 2.2%, respectively, while the bitcoin-dominant CoinDesk 20 (CD20) added 1.5%.
- The perceived strength of the altcoin market can be attributed to a lack of liquidity across the market. When prices fell on Friday, the amount of supply in the exchanges exceeded demand. This sent several assets into “oversold” territory as the move was overblown, leading to today’s relief rally.
- This liquidity gap has plagued the cryptocurrency market since October, when a $19 billion liquidation event wiped out the market structure, leaving several traders and market makers stranded in its wake.
- To break that cycle, market anchor bitcoin needs to trade back above $80,000 and consolidate, which would mean gains could rotate into the more speculative altcoin market to establish macro support levels.
