Bitcoin BTC$91,182.38 and the wider crypto market took another leg down, with the BTC price reversing all of last week's move to $98,000.
The Asia session spurred most of the selling as prices began to tumble at 01:15 UTC before consolidating at 07:00 UTC.
Privacy coins monero XMR$569.14 and dash DASH$72.29 lost 9% and 3% respectively since midnight as trader interest cooled following a barnstorming start to the year.
Tuesday's crypto market selloff mirrors a move in U.S. equity index futures. Futures tied to the Nasdaq 100 fell more than 1.9% since derivatives markets opened on Sunday evening while S&P 500 futures are down by 1.6%.
The negative price action can be attributed to the same jitters that dominated Monday's environment, with the EU and the U.S. threatening each other with tariffs if they can't find a resolution to the Greenland situation.
Haven assets extended rallies, with gold and silver rallying to record highs.
Derivatives positioning
- Crypto futures bets worth over $360 million were liquidated by exchanges in 24 hours, with bullish bets accounting for most of the tally.
- Bitcoin's 30-day implied volatility (IV), represented by the BVIV index, has bounced to 42% from 39.7%, pointing to renewed demand for options, or hedging instruments.
- The 30-day IV in the U.S. Treasury notes increased slightly from multi-year lows, but remains considerably lower than in November. A continued rise in bond market volatility could breed risk aversion.
- DOGE, ZEC and ADA are leading the decline in futures open interest (OI) across most tokens, indicating capital outflows. OI in BTC futures held steady over 24 hours.
- Still, funding rates for most major tokens remain positive, indicating a bias for bullish exposure. Rates for ZEC and TRX are deeply negative, a sign of dominance of bearish short positions.
- On Deribit, traders continue to price put options higher than calls in both BTC and ether ETH$3,108.38. That indicates lingering downside fears.
- On decentralized platform Derive, traders are pricing a 30% chance of BTC sliding below $80,000.
Token talk
- The lower liquidity altcoin market suffered more than bitcoin as even the major cryptocurrencies like ether and solana SOL$128.73 fell more than 3%.
- DeFi tokens AERO and SKY were even harder hit by the week's bearish price action, losing more than 5.5% in 24 hours.
- And while a select few traders are still turning hundreds of dollars into hundreds of thousands of dollars, the memecoin sector was deflated on Tuesday; with the CoinDesk Memecoin Index (CDMEME) posting a day-to-date loss of 3.91%, underperforming all other benchmarks.
- The broader altcoin market is now very much depending on bitcoin's next move. If the largest cryptocurrency begins to consolidate between $85,000 and $95,000, altcoins could stabilize, leaving certain sectors to impress.
- However, extended volatility, for example a drop through $85,000, would result in carnage for the altcoin sector as liquidity has failed to recover from October's $19 billion liquidation cascade.
