coindesk.com
Bitcoin briefly rose to a two-month high of $96,240 on Tuesday, while traders piled into the altcoins.
More than $500 million worth of futures positions were liquidated over the past four hours as bitcoin broke the $94,500, a key level that traders are watching, for the first time since November. Bitcoin attempted and failed to break this level three times before on Jan. 5, Dec. 10 and Dec. 3.
Open interest for bitcoin futures stands at $30.6 billion, having tumbled from a high of $31.5 billion over the course of the day. The drop off in open interest indicates aggressive buying on spot markets, while on the derivatives side, traders are covering shorts.
Altcoins lead the way
Privacy coin DASH appeared to have sent a signal before bitcoin's breakout, rising to its highest point since 2021 on significant volume, which may have inspired confidence among other trading pairs.
The gains are now widespread: OP$0.3675 is up by 18.5% while TIA and PENGU are 14% higher over a 24-hour period, indicating renewed optimism from traders following a corrective altcoin phase.
Bitcoin dominance has now also tumbled from a high of 59.3% on Dec. 24 to 58.6% as several altcoins outperform the world's largest cryptocurrency.
The CoinDesk 80 Index (CD80), which tracks the price of a basket of 80 tokens excluding bitcoin, is up by 8% day-to-date, while the CoinDesk 20 (CD20) is lagging behind at 6.35%.
Why is the market up?
While it appeared that bitcoin lacked bullish catalysts in 2026, the market has seemingly shrugged off that negative sentiment, punishing those betting on the downside.
One possible reason is that the October $19 billion liquidation cascade meant bitcoin and the broader crypto market were heavily "oversold," which created a situation where several assets were undervalued, but traders simply didn't have the appetite to buy after a grueling period.
Instead of trading crypto, traders left the market and headed for precious metals like gold and silver, as well as AI stocks in the case of South Korea - a nation that historically has been a barometer for retail trading.
The crypto fear and greed index regularly slumped to "extreme fear" levels in recent months, typically a good time to buy when sentiment is low and the general mood is bearish.
In the short term, traders could expect bitcoin to re-test the $94,500 level as the new floor, before heading up to $99,000 - the next key level for traders to watch, as this has acted as support for the price between June and November that will now be resistance.
However, a failure to hold the $94,500 could result in bitcoin falling between $85,000 and $94,500.