Bitcoin is encountering significant pressure in the market as it trades at approximately $107,778.89, marking its first loss in October since 2018. This downturn raises concerns about a potential decline to $100,000 or below, as evidenced by a notable bias towards put options within the options market.
Recent market analyses indicate a trend of capital outflows, evident in a decline in futures open interest across various cryptocurrencies. Chief market analyst at The FxPro, Alex Kuptsikevich, emphasizes the importance of Bitcoin’s 200-day simple moving average, currently around $107,000, as a critical support level. He notes that the ongoing testing of this support since mid-October warrants caution regarding market movements in the near future. Kuptsikevich warns that a worst-case scenario could emerge if stock markets simultaneously experience pressure while the dollar strengthens. However, he also highlights the presence of higher lows during the recent sell-off, suggesting that not all signals are dire.
In terms of derivatives positioning, Bitcoin (BTC) and Ethereum (ETH) futures open interest has seen little change over the past 24 hours. In contrast, the open interest for altcoins like XRP, HYPE, and DOGE has decreased, indicating a broader trend of capital exiting the market. The cumulative volume delta, normalized for open interest, reflects a gradual decline that aligns with the overarching bearish sentiment, suggesting an inclination towards short positions.
Volatility indexes for Bitcoin and Ethereum have seen an uptick, hinting at renewed expectations for price fluctuations. The annualized three-month basis for BTC and ETH on the Chicago Mercantile Exchange remains under 10%, and the positioning of futures and options for Ethereum remains notably elevated relative to Bitcoin. On the Deribit exchange, there is a clear preference for put options in short- and near-term expirations.
The altcoin market has faced adverse conditions, with notable losses over the past week affecting various tokens. Altcoins such as ENA and doublezero (2Z) have seen sharp declines of 7% in a single day, amplifying a 30% decrease over the past week. Plasma has also suffered, trading at $0.27, significantly lower than its previous high of around $0.90 shortly after its launch.
Despite the market distress, there is a flicker of cautious optimism among traders as the average relative strength index indicates oversold conditions, suggesting the potential for a relief rally. Much of this momentum will hinge on the performance of Bitcoin and Ethereum, with pivotal support levels at $107,500 and $3,700, respectively. A break below these thresholds could trigger widespread negative effects on the altcoin market, exacerbated by differing liquidity levels and potential derivatives liquidations.
Should Bitcoin manage to recover above the $112,000 mark, it may alleviate current bearish sentiment and provide altcoins with a chance to challenge previous resistance levels. Overall, the cryptocurrency market cap stands at $3.59 trillion, reflecting a staggering loss of $600 billion since October 6, underscoring the ongoing turbulence in the market.
