Bitcoin Reclaims Ground After Midterm Slide as DeFi Assets Drive Recovery

Bitcoin climbed back to approximately $78,300 on Wednesday after briefly touching $75,600, recovering around 1.3% since midnight UTC as investors reassessed the implications of the Democratic Party’s gains in the U.S. midterm elections. Ether (ETH) rose 2%, while the CoinDesk 80 Index advanced 2.3%.

The broader crypto market also moved higher, with DeFi-related cryptocurrencies outperforming major digital assets. The CoinDesk DeFi Select Index added 5%, helped by a 6.2% gain in Injective (INJ).

Bitcoin initially declined as election results indicated that Democrats were gaining control of Congress, fueling concerns about potential changes to the regulatory environment and the progress of crypto legislation. The market subsequently recovered as U.S. stock futures turned positive. Attention has now shifted toward Friday’s U.S. employment report, which could provide fresh insight into the strength of the economy.

Crypto Derivatives Show a Shift Toward Buyers

Derivatives trading across the cryptocurrency market accelerated over the past 24 hours. Futures volume increased 27%, while open interest (OI) rose 3%, indicating that much of the activity involved existing contracts being traded rather than a significant expansion in new positions.

Total liquidations increased 22% to $469 million. Meanwhile, the taker buy-sell ratio moved above neutral, with buyers representing 51.6% of market orders and sellers accounting for 48.4%. This reversed the previous session’s trend, when sellers controlled more than 51% of market orders.

Zcash (ZEC) experienced a substantial increase in derivatives activity. Its open interest jumped 25% alongside a 14% price rally, pointing to increased speculative positioning. The cryptocurrency also recorded the strongest market-order buying pressure, while positive funding rates indicated that traders holding long positions were paying those on the short side.

NEAR gained 7%, but its open interest expanded by only 0.35%. This relatively small increase suggests that the rally was not accompanied by significant new derivatives exposure. Nevertheless, NEAR recorded the market’s second-strongest buying pressure and continued to maintain positive funding rates.

Bitcoin’s open interest increased 1.6% as its price advanced 2.1%. Ether posted a stronger 4.2% increase in open interest against a 2.7% price gain. Trading volumes for both cryptocurrencies grew between 37% and 40%, while funding rates remained positive.

Funding rates were modestly positive across most major digital assets. Monero (XMR) and Bitcoin Cash (BCH) stood out with negative funding readings.

Open-interest-adjusted cumulative volume delta data indicated that buying and selling pressure remained uneven across individual cryptocurrencies. Chainlink (LINK) recorded the most negative reading, while the market-order selling pressure that accompanied Bitcoin’s early decline eased as the cryptocurrency recovered.

Options data provided another indication of improving market sentiment. Bitcoin’s one-week implied volatility dropped 41% to 34%, suggesting expectations of reduced short-term price fluctuations. Put-call skew, which had briefly approached 19%, also retreated toward its previous level, indicating that demand for downside protection had weakened.

Call options accounted for four of Bitcoin’s six most actively traded contracts. The December 25 $88,000 call and November 7 $78,000 call attracted notable trading interest. Ether options showed a different positioning trend, with put contracts making up four of its six most active contracts.

DeFi Cryptocurrencies Rally While Trump-Associated Tokens Slide

Venice (VVV) led the CoinDesk 100 Index, gaining 7% since midnight UTC and rising 17% over the previous 24 hours.

GRASS, BONK, NEAR and MORPHO each posted gains of approximately 6%, while Zcash advanced another 5% during the session, extending its 24-hour increase to 12%.

The positive momentum also spread across the DeFi sector, where all seven components of the CoinDesk DeFi Select Index recorded gains. Injective and Ethena (ENA) were among the strongest performers.

Memecoins also registered gains above the broader market average. PEPE increased 5%, while BONK climbed 6%. However, the CoinDesk Memecoin Index advanced only 1.1%.

In contrast, tokens associated with U.S. President Donald Trump continued to face selling pressure. The TRUMP cryptocurrency fell 7.1%, while World Liberty Financial’s WLFI lost 5%. Trump Media shares also declined 6.5% in premarket trading.

The latest recovery has yet to translate into a broader improvement in investor confidence. CoinMarketCap’s Fear and Greed Index remained at 37, indicating continued fear among market participants. Its Altcoin Season Index stood at 51, suggesting that the market had not yet shifted decisively toward an altcoin-led cycle.