Memecoins lead crypto market gains as biggest tokens languish

Bitcoin $BTC$68,606.95 is struggling to regain a foothold above $70,000 as altcoins outperform.

The largest cryptocurrency is little changed over 24 hours, while the broader CoinDesk 20 (CD20) index rose 0.40% even as ether $ETH$2,008.28 declined. Memecoins are leading gains, with the CoinDesk Memecoin Index (CDMEME) adding 1.5% as PIPPIN climbed 46%.

Tokens linked to artificial intelligence (AI) also fared well. WLD$0.3810, co-founded by OpenAI CEO Sam Altman, rose more than 3% in the past day, while Virtuals’ VIRTUAL token rose 2.4%. That's as the "agentic AI," where AI tools now also execute tasks, narrative grows.

Still, the crypto Fear and Greed Index still points to “extreme fear” in the market after last week’s selloff.

Meanwhile, traditional markets steadied, buoyed in part by Prime Minister Sanae Takaichi’s landslide election victory in Japan. While Japanese bond yields rose after the result, they have since fallen near to pre-election levels. That reduces the risk of trillions of dollars invested overseas moving back to Japan in search of higher yields.

Derivatives Positioning

• Bearish momentum in $BTC futures is intensifying as open interest (OI) continues its descent to $15.9 bo;;opm, signaling a deep and prolonged deleveraging phase.
• This shift is most evident in funding rates on Binance (-7%) and Bybit (-8%), which have collapsed into aggressive negative territory. That's a sign short sellers are paying a heavy premium to maintain their dominance. With the three-month basis stagnant at 3%, institutional appetite remains sidelined.
• The $BTC options market is showing a cooling of extreme defensive sentiment. The one-week 25-delta skew is at 16%, while call dominance has rebounded to 56%, indicating a shift toward bottom-fishing.
• The implied volatility (IV) term structure is transitioning from extreme backwardation toward a hybrid position that suggests that while near-term protection remains pricey, long-term volatility expectations are stabilizing.
• Coinglass data shows $290 million in 24-hour liquidations, with a 53-47 split between longs and shorts. $BTC ($114 million), $ETH ($89 million) and others ($16 million) were the leaders in terms of notional liquidations. Binance's liquidation heatmap indicates $68,160 as a core liquidation level to monitor, in case of a price drop.

Token Talk

• Merkle Trade, the largest perpetual futures decentralized exchange on the Aptos blockchain, is in the throes of shutting down. The exchange disabled new trading positions on Friday and will forcibly close all open positions today.
• Merkle’s native token, MKL, has added 9% in the past 24 hours. It remains redeemable without withdrawal fees, with a final staking rewards payout scheduled for Feb. 12. The token has lost 77% in the past 12 months.
• The move comes less than two years after Merkle raised $2.1 million in a seed round backed by Aptos Labs, Hashed and Arrington Capital.
• Despite processing $30 billion in trading volume since its 2023 debut, the team gave no clear reason for the closure in a post on X last week, noting only that the decision followed “careful consideration.”