Thursday’s sell-off was one of the sharpest and most devastating in the history of the cryptocurrency market: more than $2.6 billion was liquidated as bitcoin. fell to $60,000, marking its lowest point since October 2024.
The drop led to bitcoin being the third most “oversold” in its history, according to the Relative Strength Index (RSI), a momentum oscillator that tracks market conditions. Historically, oversold conditions of this magnitude precede a major rebound.
Things got a little brighter when Asia woke up, with bitcoin bouncing from $60,000 to over $65,000, while ether It broke out from a low of $1,750 to trade back at $1,920.
Still, the overall crypto market remains in a bear market. Zcash privacy coin has lost 34% of its value over the last week, while optimism solarium and ether are dealing with losses of around 30%.
Traditional markets have also had problems in recent days. The Nasdaq 100 index is down 6% since Jan. 28, and precious metals gold and silver are down 12% and 38%, respectively, over the same period.
Derivatives positioning
- The cryptocurrency futures market is worth less than $100 billion for the first time since March 2025, as traders continue to reduce risk as prices fall and liquidations cause wealth destruction.
- More than $2.6 billion in leveraged futures bets have been liquidated or closed by exchanges due to margin shortages in 24 hours. Of those, more than $2.1 billion were long bets. This shows the degree of bullish leverage that was deployed around the fundamental support of $70,000, which was broken on Thursday.
- Open interest (OI) has decreased in futures linked to all major tokens, including the recent HYPE.
- Annualized perpetual funding rates for major tokens such as BTC, SOL, XRP, and DOGE have turned negative as price drops triggered demand for bearish bets. Negative rates could cause arbitrageurs to resort to investing cash and taking bets.
- Bitcoin’s 30-day annualized implied volatility surged to nearly 100% Thursday night as traders rushed to buy put options, with some taking advantage of these bearish bets at strike prices as low as $20,000. Since then, volatility has returned to below 70%. A similar pattern is seen in ether implied volatility.
- Still, short-term puts on bitcoin and ether continue to trade at a volatility premium of 20 or more points to calls, a sign of lingering bearish concerns. Put options also remain more expensive on the long end.
- Options linked to BlackRock’s IBIT ETF saw record activity on Thursday, with traders rushing to buy put options. The one-year bias increased to over 25 points, reflecting a huge premium for puts, indicating maximum fear.
symbolic talk
- The altcoin sector presented a pair of unlikely winners despite the broader market decline on Thursday. Decree focused on privacy it rose 31% in 24 hours, seemingly unfazed by the carnage, as it joined a rally that took it from $17.4 to $24.2.
- HyperLiquid’s HYPE token continues to perform well, relatively speaking, as it is still up 11% this week despite falling 4% in the last 24 hours.
- XRP was one of the most volatile altcoins, falling more than 30% before rebounding 21%. Trading volume exceeded $14 billion, an increase of 143% in 24 hours.
- CoinDesk 20 (CD20) and CoinDesk 80 (CD80) fell around 6% in the last 24 hours, but the worrying corner of the market was DeFi, with the DeFi Select Index (DFX) underperforming the broader market with a drop of more than 10%.
- CoinMarketCap’s “altcoin season” indicator is now at 24/100, down from Wednesday’s high of 32/100, suggesting investors are looking for safer, less volatile assets like bitcoin or stablecoins.
