Bitcoin hovers near $89,000 as risk-off sentiment grips global markets

Bitcoin stabilized after Tuesday’s sharp selloff, tracking a broader risk-off move in global equities, while altcoins came under heavier pressure amid elevated volatility.

Crypto markets consolidated overnight following a wave of selling that pushed bitcoin down to a low of $87,760. Since bottoming around 23:00 UTC, the largest cryptocurrency has recovered modestly and was recently trading near $89,000, placing it back in the middle of a range that has largely held since Nov. 20. That range was briefly broken last week, when bitcoin rallied toward $98,000 during a five-day advance tied to a stronger start to the year.

The downside move coincided with growing risk aversion in traditional markets. Nasdaq 100 and S&P 500 futures are both down about 2% since Sunday’s open, following Wall Street’s steepest single-day decline since October.

The shift toward safety sent gold and silver to fresh record highs as investors sought haven assets amid renewed fears of a trade conflict between the United States and the European Union. Tensions escalated after President Donald Trump threatened tariffs linked to Greenland’s ownership, prompting retaliatory proposals from European officials.

In crypto markets, thin liquidity magnified losses across altcoins. CoinGlass data showed roughly $500 million in altcoin futures positions were liquidated over the past 24 hours.

Derivatives positioning

Bitcoin saw heavy liquidation activity during Tuesday’s drop to $87,760, with $324 million in long positions wiped out amid the volatility. The subsequent rebound triggered about $34 million in short liquidations.

Bitcoin’s 30-day implied volatility climbed to 44.34 on Tuesday, the highest level since Jan. 10, as traders turned to options markets to hedge risk.

Open interest in bitcoin futures fell 3.25% to $28.3 billion over the past 24 hours, alongside a roughly 2% price decline. A notable $300 million drop in open interest around 05:00 UTC coincided with bitcoin’s brief move back toward $90,000, signaling profit-taking by short sellers.

Despite the selloff, global funding rates remained positive, indicating leveraged traders continue to maintain a bullish bias even as prices retreated.

Elsewhere, zcash saw a 2.5% decline in open interest alongside a 1.5% price increase, suggesting traders who had built short positions following the Jan. 8 governance dispute are beginning to unwind bearish exposure.

Token talk

Monero led losses among major altcoins over the past 24 hours, falling 13.6% and extending its decline to 37.25% from its Jan. 14 record high.

Ether slid 4.5%, underperforming other large-cap tokens such as Solana and XRP, which were each down about 1.25%. Cardano was comparatively resilient, losing just 0.85%.

By contrast, blockchain gaming token Axie Infinity bucked the broader downtrend, jumping more than 16% on $2.1 billion in daily trading volume to reach its highest level since September. AXS is now up 165% since Jan. 13, highlighting relative strength among metaverse-related tokens.

The CoinDesk Metaverse Select Index (MTVS) has been the strongest-performing benchmark this year, rising 43.9% year-to-date, while DeFi and memecoin indices are down 4.2% and 3.6%, respectively.

Meanwhile, WLFI, the DeFi token linked to President Trump’s family, gained 6.6% since midnight UTC, supported by rising activity around the platform’s USD1 stablecoin. Circulating supply of USD1 has expanded from $2.7 billion to $3.4 billion since Dec. 24.

CoinMarketCap’s “altcoin season” index remains low at 26 out of 100, pointing to a bearish backdrop for altcoins relative to bitcoin. However, several tokens are now deeply oversold, leaving room for a potential short-term relief rally as soon as Wednesday.