The cryptocurrency market remained stable on Friday, with bitcoin trading was little changed at $71,700 and ether (ETH) at $2,180, extending the low-volatility price action that has characterized the last few months.
Daily Bollinger Bands, a technical analysis tool that measures market volatility, are at their narrowest point since early 2024. In the past, such a tight range (bitcoin has hovered between $63,000 and $75,000 since early February) ended with a 40% move in price, according to crypto analyst Eric Crown.
A break above $75,000 for bitcoin would trigger bullish momentum by trapping short traders who need to buy at market prices to cover their positions, while a short-term move below $70,000 would liquidate around $200 million in long positions that are betting on the breakout, according to the CoinGlass liquidation heat map.
A key catalyst on Friday will be US consumer price index (CPI) data. March inflation is estimated at 3.3% year-on-year, driven by rising energy prices. High inflation numbers tend to spur bullish US dollar price action, which could weigh on risk assets like bitcoin.
Derivatives positioning
- Open interest (OI) in bitcoin futures rose 1%, with average perpetual funding rates on major exchanges at their highest level since February 4. This shows a growing investor appetite for bullish exposure.
- Other major cryptocurrencies had mixed results. OI increased slightly in XRP (XRP) while remaining stable in ether (ETH) and solana (SOL). HYPE and AVAX are other standouts, showing a bullish combination of OI growth and positive funding rates.
- Meanwhile, the privacy-focused ZEC is showing OI growth and negative rates, a sign that traders continue to short futures and hedge downside risks even as the spot price recovers. ZEC price rose to almost $400, the highest since January 28.
- There seems to be no end to the downward trend in BTC’s 30-day implied volatility index, BVIV. The measure has fallen to 45%, indicating calm in the market. It has fallen in an almost straight line from 58% on March 31. Ether’s volatility index shows a similar pattern.
- The decrease in volatility is largely due to flows related to ETFs. “The ETF complex has created a feedback loop: institutions sell call options for yield, which suppresses bullish volume, making selling more calls even more attractive. The impact is still subtle, but the direction of travel is clear. The Bitcoin options market is maturing into a structurally biased market, just like stocks,” STS Digital CEO Maxime Seiler told CoinDesk.
- The term structure of implied volatility remains stable over the next six months and then increases starting in September, suggesting that the market is preparing for a few quiet months in the interim.
- On Deribit, BTC and ETH options continue to show selling biases, although they are much weaker than a week ago, as traders pursue bullish bets, particularly the BTC call option at the $80,000 strike.
symbolic talk
- CoinDesk’s DeFi Select Index (DFX) is the best-performing benchmark on Friday, up 0.38%, while the bitcoin-dominant CoinDesk 5 (CD5) is down a quarter of a percent.
- The CoinDesk Computing Select Index (CPUS) is the worst performer, losing 1.4% after being dragged down by Bittensor (TAO), which lost more than 12% since midnight UTC after Covenant AI, one of the network’s largest subnet developers, said it would leave Bittensor.
- “The entire premise of Bittensor, the promise that attracted builders, miners, validators, and investors to this ecosystem, is that no entity controls it,” Covenant AI founder Sam Dare wrote on X. “That promise is a lie.”
- One token that shrugged off the broader cryptocurrency market apathy was DASH, which rose more than 19% since midnight UTC, contributing to a 34% gain in 24 hours as traders returned to the privacy sector.
