The cryptocurrency market faced significant selling pressure on Tuesday, leading to notable declines in the two largest cryptocurrencies by market capitalization. Bitcoin, which had shown signs of stability, was trading at approximately $107,800, down from a previous high of $109,246.50, while ether dipped to $3,867, having initially bounced back over the weekend. Concerns over a potential “lower high” pattern have emerged, prompting analysts to anticipate further declines unless bitcoin maintains its position above the October 17 low of $103,700.
In the derivatives market, the bitcoin futures segment is displaying signs of a cautious recovery. Open interest has risen to $26.06 billion as traders slowly re-engage, with the three-month annualized basis remaining stable in the neutral-to-bullish range of 5%-6%. Notably, funding rates have turned mostly neutral to positive, suggesting that the previous bearish sentiment has diminished. OKX is spearheading this trend with a significant positive funding rate of 7.51%.
The bitcoin options market appears strongly bullish, driven by increasing expectations of price volatility. The implied volatility term structure is showing an upward slope, indicating an anticipation of heightened market fluctuations. Additionally, the 25-delta skew across all time frames has increased, surpassing 11.86%. This positive skew indicates that traders are willing to pay a premium for call options, reflecting strong belief in a potential upward price trajectory, despite the nearly balanced 24-hour put-call volume.
According to Coinglass data, the market saw approximately $320 million in liquidations within a 24-hour period, with a ratio of 76% longs to 24% shorts. Bitcoin and ether were central to these liquidations, with notable figures of $88 million and $85 million, respectively. The Binance liquidation heatmap has highlighted $112,300 as a critical level to watch, especially if there is a price surge.
Meanwhile, in token news, South Korean exchanges Upbit and Bithumb made headlines by listing several lower market cap tokens, which catalyzed substantial price increases. Upbit’s introduction of F$0.01185, alongside trading pairs in won and dollar, led to a surge exceeding 50% before some gains were relinquished. The trading volume for F$ reached over $200 million, reflecting a 669% increase. Bithumb’s inclusions of ZORA and RECALL also saw positive movements, with ZORA climbing more than 10%.
However, these gains were largely exceptions in a predominantly bearish market. The altcoin sector experienced widespread downturns, with the CoinDesk 80 Index declining by 4.5% in the past 24 hours. Notable losers included CAKE and ETHFI, both of which dropped 10%, while major assets like ether, BNB, and SOL saw declines ranging from 4% to 5%. Traders are now closely examining the recent market bounce to determine if it represents a lower high, signifying a bearish trend and a potential reversal following fresh record highs set less than a month ago.
