coindesk.com
The crypto market fell Friday, with bitcoin $BTC$63,064.53 recovering from a drop below $63,000 to trade down 1.2% since midnight UTC and ether ($ETH) losing 1.74%. Total crypto market capitalization shed 1.86% to sit at $2.16 trillion.
The selloff is not isolated to crypto. Nasdaq 100 index futures dropped 1.91% and S&P 500 futures slipped 0.96%, pointing to macro forces driving the move rather than anything crypto-specific. Japan’s Nikkei 225 index dropped 4%, while South Korea’s Kospi stock exchange was closed for Constitution Day.
In a a classic risk-off rotation, the Dollar Index (DXY) rose to 100.75 while gold advanced 0.61% to climb back above $4,000.
The move to the downside can be attributed to a selloff in tech stocks across North America and Asia, as well as mounting tensions in the Middle East.
"The market is ending the week with two bruises: AI fatigue and Hormuz heat,” said Patrick Munnelly at Tickmill Group. “The semiconductor selloff has gone from profit-taking to position-clearing, dragging Asia toward its worst levels in months.”
One cause for optimism heading into the weekend is that the average relative strength index (RSI) across crypto pairs. The reading has dipped to 42.23, approaching the oversold conditions that triggered July's relief bounce.
Derivatives positioning
- The long-short ratio in crypto futures markets, as measured by taker buy-sell volume, has slipped to 0.94, the lowest since June 2.
- A "taker" is the entity executing a trade at the current market price, and the ratio indicates which side of the transaction is being more aggressive with market orders. The latest reading suggests that bears are currently in control, validating the price declines seen over the past 24 hours.
- That said, overall volume has cooled by 4% in 24 hours to $163 billion, while open interest (OI) remains largely steady at around $111 billion. This suggests that while buy-sell volume is skewed bearish, overall market activity has declined during the price drop.
- $BTC's total OI has pulled back to 747K $BTC from yesterday’s high of 755K $BTC. A similar trend is evident in $ETH, XRP, and SOL futures, where OI has held steady or declined slightly.
- These changes indicate that major token futures are not yet showing signs of aggressive new shorts entering the market or panic unwinding due to margin calls. For now, it remains an orderly price drop.
- $HYPE stood out with an OI increase of nearly 2% alongside a sharp 8% drop in the spot price. This combination typically confirms price weakness, signaling that new short positions are being opened. Furthermore, the 24-hour OI-adjusted cumulative volume delta (CVD) for $HYPE is the most negative among major tokens, matching memecoin DOGE. A negative CVD implies that sellers are being aggressive, shorting at market prices rather than using passive limit orders.
- The broader market picture appears equally bearish, as most coins, including $BTC and $ETH, display a negative 24-hour CVD.
- However, bitcoin and ether's 30-day implied volatility indexes remain near recent lows, signaling continued market stability. Put simply, while spot prices have dropped, the selloff has yet to trigger panic buying of options or a rush for hedging contracts.
- In ether’s case, a trader or a group of traders recently purchased large-scale straddles, betting on significant price swings by July 24.
- Regarding volumes, three of the top five most-traded $ETH contracts are currently puts. A put option offers protection against price declines in the underlying asset. Yet, at the same time, the $2,100 call remains the single most-traded bet of the past 24 hours. For bitcoin, the $62,500 put has emerged as the clear favorite among traders.