The crypto market showed signs of volatility on Tuesday, with bitcoin rising to $68,300 shortly after midnight UTC before falling back to $66,500.
The initial surge was driven by reports that US President Donald Trump was keen to end the war in Iran without opening the Strait of Hormuz. Optimism faded after Israeli officials said they were prepared to “continue operating for the coming weeks.”
The war, now in its 32nd day, has sent energy prices soaring, with Brent crude trading around $107 a barrel, raising concerns about inflation and a widespread sentiment of risk aversion.
Cryptocurrencies, while relatively resilient throughout March, are beginning to show signs of weakness after bitcoin failed to break above $75,000 on two occasions.
US stocks broke away from the cryptocurrency market on Tuesday, with Nasdaq 100 and S&P 500 index futures adding 0.8%.
Derivatives positioning
- Industry-wide cumulative crypto futures open interest (OI) fell more than 3% to $103.79 billion in 24 hours, continuing the risk-averse trends seen during the first quarter. The figure has decreased more than 18% since the beginning of the year.
- The OI has decreased on BTC, ETH, SOL and XRP futures, indicating capital outflows from major cryptocurrencies. Other tokens, such as BCH, AVAX, and LTC, have seen double-digit percentage drops in open interest.
- ZEC, focused on privacy, stands out, whose futures market shows optimism. The token’s OI increased by over 3% alongside slightly positive funding rates and a cumulative volume delta. This combination points to increasing demand for bullish exposure.
- At the other extreme is DOGE, which has the most negative 24-hour cumulative volume delta among the major tokens.
- Bitcoin’s 30-day implied volatility index, BVIV, has risen to 58% from 54% late last week, surpassing its 50-day average to suggest more gains ahead. This means potential for further price turbulence.
- Ether volatility index remains stable between 70% and 80% for the seventh consecutive day.
- On Deribit, bitcoin risk reversals until expiration at the end of June show a strong bias towards puts. These downside hedges trade at a volatility premium of 8 to 10 points over call options. Meanwhile, the downtrend is relatively measured in the ether.
- The $60,000 bitcoin put remains the most popular play with total open interest of $1.5 billion.
symbolic talk
- The altcoin market suffered more than bitcoin on Tuesday, with tokens like NEO, HBAR, and PUMP losing between 2.6% and 3.3% since midnight UTC.
- A select few tokens are bucking that trend, including BCH and AI-related coins, which are in the black.
- CoinMarketCap’s “Altcoin Season” indicator is currently showing 51/100, reflecting relative strength over the past few weeks despite Tuesday’s sell-off.
- However, the next big move will still be determined by bitcoin and whether it can break above $75,000 or below $62,000. Altcoins typically perform well when bitcoin consolidates, but lose ground during big swings.
