The cryptocurrency market has returned to its familiar trading range after briefly surging to its highest level since early February on Friday.
Bitcoin (BTC) is trading slightly below $75,000, while Ethereum (ETH) is trading at $2,300, both significantly below Friday’s highs of $78,300 and $2,460, respectively.
One reason traders are bullish on Bitcoin is that the CME Bitcoin futures market, favored by institutional investors, closed Friday at $77,540, up 3.8% from an opening price of $74,600, forming a “CME gap.” A similar gap occurred last week and was filled before Monday’s close.
The first step has been taken: Bitcoin has risen 1.5% since midnight UTC, indicating a recovery in market sentiment following a turbulent weekend.
Markets plunged over the weekend as shipping through the Strait of Hormuz was disrupted again after reopening on Friday. The renewed closure of the strait caused crude oil prices to surge from $78 to $88 per barrel.
This has put pressure on risk assets, with both the Nasdaq 100 futures and S&P 500 futures declining 0.59% since midnight.
Derivatives position
- Over the past 24 hours, the open interest (OI) in the cryptocurrency market remained stable around $120 billion. In stark contrast, trading volume surged by 30%, indicating a significant increase in market activity, but without a corresponding rise in new positions. This may suggest higher turnover, increased short-term positioning, or traders rotating risk rather than deploying new capital.
- Open interest for Solana (SOL), Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) remained largely stable. Open interest for HYPE futures decreased by 3% alongside the price decline, indicating capital outflow. In contrast, open interest for AVAX and the S&P 500 perpetual contract increased by 6% to 10%.
- Due to collateral damage from the weekend attack on KelpDAO, funds rapidly exited the Aave lending platform, causing the open interest in AAVE futures to surge to a record high of 3.46 million tokens.
- Funding rates for BTC, ETH, and several other tokens have turned negative, indicating a bias toward short positions that profit from price declines in these tokens.
- On Deribit, the trading prices of BTC and ETH options continue to be higher for puts than calls, indicating that market concerns about downside risk remain elevated.
- The block flow shows a preference for Bitcoin call spreads (directional bets) and Ethereum straddles (volatility trades).
Token Talk
- The altcoin sector has been severely hit by a $292 million scam, as the rsETH token of Kelp DAO was dumped over the weekend, creating contagion risks across the DeFi market.
- As a result, Aave's total value locked (TVL) dropped from $26.5 billion to $17.5 billion, as the exploit raised concerns about bad debt impacting Aave's WETH pool, triggering massive withdrawals and a liquidity crisis.
- Aave's token, AAVE, rose 2.2% on Monday after falling 22% on Saturday.
- On Monday, the CoinDesk 20 (CD20) index, led by Bitcoin, rose 1%, outperforming the CoinDesk 80 (CD80) index, which is dominated by altcoins, and the DeFi Select index (DFX), which rose 0.6% and 0.9% respectively.
- One of the most volatile tokens is Celestia (TIA), which has risen over 4% since midnight but is still down 3.9% over the past 24 hours.
- CoinMarketCap's "Altcoin Season" indicator is at 36/100, indicating that investors favored Bitcoin after a brief breakout on Friday.