Bitcoin steadies at key support level as trader sentiment turns to ‘extreme fear’

Major cryptocurrencies pulled back from overnight highs during Asian trading, with bitcoin holding above a key support zone even as investor sentiment remains entrenched in bearish territory.

During Asia hours, the crypto market stayed above important technical levels, with bitcoin changing hands near $78,400 and ether trading around $2,290. Gains faded after midnight UTC as several major tokens surrendered part of their earlier advances.

While U.S. equities and precious metals moved higher, crypto assets underperformed, highlighting ongoing relative weakness across the sector. Sentiment remains strained, with the Fear and Greed Index at 17 out of 100 — firmly in “extreme fear” — as traders increasingly view October’s highs as the peak of the prior bull cycle and the subsequent selloff as confirmation of a broader bear market.

Some analysts argue the downturn could be brief, pointing to a potential bitcoin price floor near $60,000. Others remain cautious. A CryptoQuant analyst warned that market structure continues to weaken, leaving downside risks unresolved.

One clear exception to the bearish tone has been HyperLiquid’s HYPE token, which has surged more than 70% over the past week. The rally has coincided with a spike in trading volume in HyperLiquid’s silver futures market, suggesting heightened retail participation.

Derivatives positioning

Bitcoin’s annualized 30-day implied volatility remains above its 200-day simple moving average, signaling elevated risk of further price swings. Ether shows a similar volatility profile.

More than $300 million in leveraged crypto futures positions were liquidated over the past 24 hours, though notional open interest across crypto futures has stabilized near multi-month lows of roughly $110 billion.

Open interest in futures tied to major cryptocurrencies — including BTC, ETH, SOL, and XRP — declined over the past day. In contrast, HYPE futures open interest jumped nearly 20%, indicating fresh capital positioning, likely on the bullish side.

Perpetual futures funding rates for major tokens remain slightly positive, pointing to a modest bullish bias. On Deribit, put option premiums for bitcoin and ether eased slightly from Monday’s levels, though puts remain more expensive across multiple expiries, reflecting continued demand for downside protection.

Block trading activity showed demand for bitcoin strangles, a volatility-focused strategy, and ether risk reversals, commonly used for low-cost hedging.

Token moves

HYPE continued to outperform on the back of rising volumes and revenue, while parts of the broader altcoin market rebounded. Polygon’s POL token, along with LIT and MORPHO, recorded gains of up to 13% over the past 24 hours.

The rebound followed a low-liquidity weekend selloff that pushed several assets into oversold territory. In thin markets, limited order-book depth can amplify price moves, particularly for altcoins.

Privacy-focused tokens Monero (XMR) and Zcash (ZEC) failed to build on their early-year strength, falling more than 20% over the past week and an additional 3.5% since midnight.

Another standout has been Canton’s CC token, which rose 28% over the past week amid growing institutional interest. Canton is a privacy-enabled layer-1 blockchain designed for institutional finance and real-world asset tokenization. In December, market infrastructure firm DTCC announced a partnership with Canton to tokenize U.S. Treasury securities on the network.