Bitcoin climbs as risk sentiment improves, altcoins hit by exploit concerns

The crypto market is showing signs of strength on Tuesday with bitcoin rising to $76,500, a gain of about 1% since midnight UTC.

The price spiked to around $77,000 at 9:45 a.m. before meeting a wave of spot sellers, who are probably protecting a potential breakout above Friday's high of $78,300.

Ether ($ETH) lagged behind bitcoin, rising just 0.3% to $2,320 as investors remained cautious around altcoins following the $290 million exploit on KelpDAO over the weekend.

Price action is still being dictated by the war in Iran, with the U.S. vice president due to travel to Pakistan for peace talks. A resolution is likely to lower oil prices, helping boost risk assets that have been inversely correlated since the war began.

U.S. stock index futures rose, demonstrating a return to risk-on sentiment.

Derivatives positioning

• The long-short ratio for the crypto futures market is 50.68%, indicating a near-even split between bullish and bearish positions. In other words, traders are largely undecided on the direction of the market’s next move.
• In the past 24 hours, major tokens such as $BTC, SOL, HYPE and BNB have added 1%-3% in futures open interest (OI), a sign of capital inflows. $ETH, DOGE and ZEC have seen slight declines in OI.
• Open interest in $AAVE futures has climbed to a record 3.59 million tokens. At the same time, the OI-adjusted cumulative volume delta has turned negative — indicating that sell orders are dominating and pushing into bids — while funding rates remain near zero. Taken together, the setup points to a slight bearish bias.
• Bitcoin and ether funding rates remain negative, suggesting a bias toward short positions. This consistent bearish environment creates potential for a short squeeze. That's a scenario in which price resilience prompts bears to mass-dump their bets, adding to the upward momentum in the spot price.
• On the CME, activity in $BTC futures continues to cool, even as the exchange-traded funds pull in millions. This combination indicates that inflows into the ETFs are mainly bullish directional plays rather than arbitrage bets involving a short $BTC futures position against the ETF's long position.
• On Deribit, $BTC and $ETH puts continue to trade at a premium to calls, reflecting downside concerns.
• Speaking of block flows (large trades executed over-the-counter), straddles and strangles cumulatively account for over 50% of the activity over the past 24 hours.

Token talk

• The altcoin market is still reacting to the weekend's $290 million exploit on KelpDAO with decentralized finance (DeFi) tokens ethena (ENA), etherfi (ETHFI) and jupiter (JUP) all posting losses over the past 24 hours despite a marginal recovery since midnight UTC.
• The CoinDesk Memecoin Index (CDMEME) is the worst-performing benchmark on Tuesday, losing 0.24% while the bitcoin-dominant CoinDesk 20 (CD20) is up by 0.65%.
• The altcoin market is showing indecision, with the CoinDesk 80 (CD80) remaining flat during the Asia and European sessions.
• $AAVE is beginning to claw back some of its weekend losses after a 22% drop, adding 2.6% despite widespread negative sentiment across the DeFi sector.
• CoinMarketCap's "Altcoin Season" indicator is at 39/100, rising from the weekend's low of 34/100, but still demonstrating investor preference for bitcoin over to altcoins.