Bitcoin’s stabilization above a critical support level encouraged traders to rotate into altcoins on Wednesday, triggering sharp rebounds across a market still dominated by extreme fear.
BTC held near $86,000 and remained largely unchanged from Tuesday, while several altcoins surged. STRK was the standout, rallying 28%. Analysts warn, however, that a breakdown below bitcoin’s $88,000 support—paired with thin liquidity—could quickly drag the broader crypto complex lower.
The bounce comes after a brutal stretch that erased roughly $400 billion in total crypto market capitalization.
Derivatives positioning
Futures open interest across major assets, including bitcoin and ether, continues to shrink, signaling persistent capital outflows and fragile trader confidence. Historically, such sentiment takes time to rebuild after steep market declines.
Two exceptions emerged: BCH and LINK, both seeing open interest climb more than 2% in the past day.
Zcash perpetuals remain heavily skewed to the downside, with annualized funding rates stuck near -50%. The extreme negative rate reflects aggressive short positioning as traders brace for a correction following ZEC’s multi-hundred-percent rally since early September. Elsewhere, funding rates for top cryptocurrencies are flat to slightly positive—suggesting cautious optimism.
Options markets highlight a decisive shift toward bearish hedging. On Deribit, the $85,000 bitcoin put is now the most crowded strike, replacing the once-dominant $140,000 call. Demand for near-term puts in BTC and ETH continues to keep short-dated volatility elevated.
Block traders in BTC favored call diagonal calendars and strangles, while ETH traders positioned with call spreads and straddles.
Token talk
The altcoin market showed early signs of resilience. AAVE, CRO, and INJ gained between 2% and 6% over 24 hours, snapping a five-day slide driven by relentless selling pressure.
The CoinDesk 10 Index, excluding bitcoin, moved slightly into positive territory but remains down 19.5% over the past month. Sentiment remains extremely depressed, with the Fear & Greed Index parked at 16/100—levels that often precede short-term relief rallies.
Market direction still depends on bitcoin. A rebound toward $98,000 would go a long way toward restoring confidence and validating the rotation into altcoins.
Ether traded at $3,095 after outperforming BTC with a 1% gain. Bitcoin dominance slipped to 58% from 60% earlier this month, reflecting increased risk appetite for select altcoins.
STRK extended its momentum with a 28% jump, buoyed by rising deposits into its BTCFi program, which now holds over 650 BTC ($72 million) and 900 million STRK—around 20% of the token’s total supply—tightening available liquidity on exchanges and fueling its upside.
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