As October approaches, Bitcoin (BTC) is witnessing an upward trend, historically considered its most favorable month. Over the past 24 hours, Ether (ETH) and all 18 assets in the CoinDesk 20 Index have also shown gains, with the index rising by 3.0%. However, the market sentiment is mixed, with several indicators raising warning flags amid these rising prices.
In the derivatives market, a noticeable shift from a bullish position has been observed. Futures trading suggests a retreat from optimism, while options data presents a more nuanced picture. Moreover, exchange-traded funds (ETFs) for both spot Bitcoin and Ether in the U.S. have recorded net outflows, indicating a potential loss of investor confidence. Fridays have marked the continuation of outflows for ETH ETFs, recording withdrawals for five consecutive days, the longest streak since early September.
Another sign of potential volatility is the CME futures gap, which represents the variance between Bitcoin’s price at the closing of the CME futures market on Friday and its reopening on Sunday. Currently, this gap is below ongoing price levels, suggesting that it may eventually be filled, which could lead to price fluctuations in the coming days.
The overall open interest for Bitcoin futures has decreased from approximately $32 billion to around $29 billion, a sign that traders are offloading their positions. Due to this reduced exposure, the three-month annualized basis has compressed to about 6%, affecting the profitability of basis trades. This signifies a market leaning away from bullish positions as traders unwind their long holdings and increase their short positions.
Despite some bullish tendencies evident in options data—the BTC Implied Volatility Term Structure shows a positive slope, and there’s increased demand for call options—the overall sentiment remains conflicted. Specifically, put options have dominated 58.43% of trading volumes, suggesting many traders are still hedging against potential downturns. This divergence hints at a polarized market, with some speculating on a short-term rally while others remain cautious.
Furthermore, BTC funding rates turning negative indicate growing bearish sentiment among traders. Hyperliquid’s funding rate, which had been stable, has sharply dipped to -6%, reflecting strong conviction among those shorting BTC on that platform. In contrast, funding rates on major exchanges such as Binance and OKX remain neutral, signaling a mixed outlook amongst traders. The overarching trend, particularly demonstrated by the significant decline on Hyperliquid, indicates a general withdrawal of risk and positions favoring a decline in BTC prices.
Recent data from Coinglass illustrates $350 million worth of liquidations within 24 hours, primarily led by Ethereum ($130 million) and Bitcoin ($52 million). Notably, Binance’s liquidation heatmap has identified $113,000 as a key level to watch in the event of a price surge.
Turning to the tokens, Plasma’s native token, XPL, is experiencing a cooling-off period after a robust trading debut. Priced at $1.29—a 12% decrease over the last 24 hours—its daily trading volume has fallen by 9% to $2.3 billion. In contrast, on-chain activity showcases a 13.7% rise in deposits, reaching $5.5 billion, with capital largely flowing into yield-generating products that currently offer annualized returns of around 20%.
This combination of attractive yields and a spike in inflows has propelled Plasma quickly up the blockchain rankings, surpassing Coinbase-backed Base in total value locked, according to DeFiLlama. While trading for XPL may have slowed down, the inflows suggest sustained interest from investors, particularly during a quieter phase in the broader crypto market as Bitcoin and Ethereum stabilize at support levels. How Plasma and its protocols will perform in a bullish market remains to be seen, but its resilience during challenging conditions has already garnered attention.
