coindesk.com
Thursday's selloff was one of the sharpest and most devastating in crypto market history: More than $2.6 billion was liquidated as bitcoin $BTC$66,263.80 tumbled to $60,000 to mark its lowest point since October 2024.
The drawdown led to bitcoin being the third most "oversold" in its history, according to the relative strength index (RSI), a momentum oscillator that tracks market conditions. Oversold conditions of this magnitude historically precede a major bounce.
The situation grew a bit brighter as Asia woke up, with bitcoin bouncing from $60,000 to above $65,000 while ether ETH$1,925.32 came off a low of $1,750 to trade back at $1,920.
Even so, the broader crypto market remains in a bear market. Privacy coin zcash ZEC$228.03 has lost 34% of its value over the past week, while optimism OP$0.1733, solana $SOL$81.14 and ether are all dealing with losses of around 30%.
Traditional markets have also struggled in recent days. The Nasdaq 100 index dropped 6% since Jan. 28, and precious metals gold and silver are down by 12% and 38%, respectively, over the same period.
Derivatives positioning
- The crypto futures market is worth less than $100 billion for the first time since March 2025, as traders continue to reduce risk as prices slide and liquidations cause wealth destruction.
- Over $2.6 billion in leveraged futures bets have been liquidated, or forced closed, by exchanges due to margin shortage in 24 hours. Out of that, over $2.10 billion were long bets. This shows the degree of bullish leverage that was deployed around the pivotal $70,000 support, which was breached Thursday.
- Open interest (OI) has declined in futures tied to all major tokens, including recent outperformer $HYPE.
- Annualized perpetual funding rates for major tokens such as $BTC, $SOL, $XRP and DOGE have flipped negative as price crashes triggered demand for bearish bets. The negative rates could see arbitrageurs resort to reverse cash and carry bets.
- Bitcoin's annualized 30-day implied volatility surged to nearly 100% late Thursday as traders scrambled to buy puts, with some snapping up these bearish bets at strike prices as low as $20,000. Since then, volatility has pulled back to under 70%. A similar pattern is seen in ether's implied volatility.
- Still, bitcoin and ether short-term put options continue to trade at a volatility premium of 20 or more points to calls, a sign of lingering downside worries. Puts remain pricier at the long end as well.
- Options tied to BlackRock's IBIT ETF saw record activity Thursday, with traders rushing to buy puts. The one-year skew rose to over 25 points, reflecting a massive premium for put options, indicating peak fear.
Token talk
- The altcoin sector presented a couple of unlikely winners despite the broader market decline on Thursday. Privacy-focused decred DCR$23.99 rose by 31% in 24 hours, seemingly unperturbed by the carnage as it added to a rally that has lifted it from $17.4 to $24.2.
- HyperLiquid's $HYPE token continues to perform well, relatively speaking, as it remains up 11% this week despite falling 4% in the past 24 hours.
- $XRP was one of the most volatile altcoins, plunging by more than 30% before bouncing by 21%. Trading volume topped $14 billion, a 143% rise over 24 hours.
- The CoinDesk 20 (CD20) and CoinDesk 80 (CD80) both fell by around 6% in the past 24 hours, but the concerning corner of the market was DeFi, with the DeFi Select Index (DFX) underperforming the wider market with a decline of more than 10%.
- CoinMarketCap's "altcoin season" indicator is now at 24/100, down from Wednesday's high of 32/100, suggesting investors are seeking safer, less volatile assets like bitcoin or stablecoins.