The crypto market fell back to the bottom of its range after the Federal Reserve’s decision to cut interest rates by 25 basis points.
The announcement, while bullish for long-term macro assets, was likely priced in by traders ahead of the event, with long exposure quickly unwinding in the following hours.
Now, bitcoin remains above the $88,200 support level, trading at $90,350 as it looks for a catalyst to push it above this week’s severe resistance level at $94,500.
The altcoin market continues to show weakness as several tokens further lost ground on their respective Bitcoin trading pairs.
Positioning of derivative products
- BTC volatility expectations continue to fall with the Fed’s decision. As of this writing, the 30-day annualized implied volatility, as represented by the BVIV index, was 46.95%, the lowest since November 13.
- The spread between the 30-day IVs of ether and bitcoin has increased lately, indicating that the market is once again focusing on the native Ethereum token.
- The VIX also normalized after the November peak.
- On Deribit, BTC and ETH risk reversals remain negative across all durations, indicating a persistent bias for puts.
- Block flows featured BTC risk reversals and call schedule spreads as well as risk reversals and straddles in ETH.
- In the futures market, open interest (OI) on ADA fell 10% in 24 hours, causing OI in most major tokens, including BTC and ETH, to fall. Capital flight suggests a transfer of risk towards the end of the year.
- Funding rates for several top tokens, excluding BTC and ETH, have turned significantly negative, a sign that traders are seeking bearish short positions.
Symbolic discussion
- The altcoin market continued its negative trend on Thursday, returning to dangerous territory as the likes of ETHFI, FET, ADA, and PUMP all lost more than 8% in the past 24 hours.
- The sell-off occurred at the same time as the respective Bitcoin and Ether withdrawals, although the percentage loss was higher as the altcoin market continues to lack liquidity after October Liquidation Cascade.
- Two market depth percentage on ETHFI, for example, sits at around $500,000 on either side of the order book, meaning a market order above that figure would move the price by more than 2%, which, given the token has a market cap of $480 million, is a relatively small transaction.
- A handful of tokens resisted the market’s downtrend on Thursday, including monero. which rose over 2% as it continues to demonstrate a rich vein of form that can be attributed to broader strength of privacy coins.
- ” from CoinMarketCap“altcoin season” index remains at a modest 19/100, far from September’s high of 77/100, as investors continue to favor bitcoin and ether over more speculative bets on altcoins.
