Crypto markets fell Wednesday after fresh airstrikes in Iran spurred a risk-off mood among investors. The CoinDesk 20 Index dropped 2.9% since midnight UTC, with all but one token declining.
Addressing NATO leaders, U.S. President Donald Trump declared the ceasefire “over” and said negotiating with Iran is a “waste of time,” though talks continue, according to news reports.
The U.S. Central Command said it hit more than 60 Islamic Revolutionary Guard Corps small boats to prevent them disrupting international shipping and Iran retaliated with attacks on Kuwait and Bahrain.
The Dollar Index (DXY) rose as the reignited tensions are likely to stoke inflation concerns. Bitcoin and ether (ETH), the two largest cryptocurrencies, fell more than 2%.
There were sharper losses across the more illiquid altcoin sector as JUP, ETHFI and PUMP all losing more than 5%.
U.S. equities also took a hit. Nasdaq 100 index futures and S&P 500 index futures tumbled as much as 1.5%.
Derivatives positioning
- Despite bitcoin’s slide to $62,000, it’s still up 6% this month and there is some good news on the derivatives front: Traders don’t look to be shorting the rally. Open interest (OI) in futures has dropped to 730K BTC from over 740K BTC a day ago.
- Ether is not faring so well. Open interest has held steady at around 13.95 million tokens despite the spot-price drop triggering liquidations of bets worth $90 million. BTC 24-hour liquidations tally just over $100 million.
- The sell-off in Canton Network’s CC token has accelerated, with the token’s price slipping to its lowest level since January just as futures open interest rises to a two-week high. This combination points to the possibility of traders shorting the decline, especially since funding rates remain deeply negative, close to -20%.
- Broadly speaking, the bear grip has tightened across major cryptocurrencies, including BTC and ETH, as indicated by their negative 24-hour OI-adjusted cumulative volume delta. A negative reading indicates that price action is being driven by traders placing market orders rather than passive limit orders.
- The latest decline in BTC and ETH seems to have spurred hedging demand for options, as their respective 30-day implied volatility indexes, BVIV and EVIV, are up for the second straight day.
- Options skew on Deribit confirms that. The one-week skew has jumped to nearly 20% in favor of puts from 16% a day ago. Puts offer protection against a price slide in the underlying asset, in this case, BTC. The same is true for ether.
- However, 24-hour volume figures show the highest activity in BTC call options at the $80,000 strike price.
Token talk
- The altcoin market is reeling, with $350 million worth of the $450 million in liquidations being attributed to altcoin trading pairs, according to CoinGlass.
- Solana (SOL) has now completely retraced a rally that began on July 2, trading back at $77 after challenging $84 on Monday.
- One token bucking the bearish sentiment is MORPHO. The DeFi token is up by 4% since midnight as total value locked (TVL) on the protocol hit a record high 4 million ETH this week, according to DefiLlama.
- A beacon of hope for the altcoin market is that several tokens are now dipping back into “oversold” territory, with the average relative strength index (RSI) dropping to 40/100 from 47/100 on Tuesday.
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