Downside Hedging Spikes as Bitcoin Moves Closer to 2024 Lows

Bitcoin and ether moved lower on Tuesday, drifting toward key support levels, while DeFi tokens led a broader market selloff. A few outliers, including XLM and LIT, managed to post gains despite the negative backdrop.

Bitcoin (BTC) slipped 1.5% after failing to hold above $60,000 on Monday and is now trading near $59,250, edging closer to weekend lows around $58,800. Ether (ETH) declined 1.73% since midnight UTC to roughly $1,580 after once again failing to clear resistance near $1,640.

Both assets are now pressing against critical multi-year support zones. Ether has previously rebounded from these levels in October 2023 and April 2025, while bitcoin is hovering near its weakest levels since late 2024. A break below could leave both without a clear support floor.

Altcoins saw sharper downside, particularly in the DeFi sector, where tokens such as Ethena (ENA), Jupiter (JUP), and Ether.fi (ETHFI) fell between 3.3% and 7.5% as risk appetite continued to fade.

The decline comes even as traditional markets remain relatively stable. U.S. equity futures were slightly higher, with the S&P 500 and Nasdaq 100 both up around 0.03%, while the U.S. Dollar Index (DXY) gained 0.25%.

In derivatives markets, Hyperliquid’s HYPE stood out, rising more than 4.3% over the past 24 hours and remaining the only major token in positive territory. The move appears spot-driven, with futures open interest steady at around 40 million tokens since June 22. Positioning still leans bullish, with funding rates near 10%, indicating perpetual futures are trading above spot.

Dogecoin (DOGE) posted the largest increase in open interest among major tokens, climbing to 16 billion tokens—its highest level since the October 10 crash and up from 13 billion the previous day. However, the positioning appears bearish, with negative funding rates and a negative 24-hour OI-adjusted cumulative volume delta pointing to aggressive selling.

Elsewhere, bitcoin, ether, and XRP futures show little change in positioning, while Solana (SOL) continues to carry elevated open interest near record highs, signaling potential volatility ahead.

Volatility indicators remain subdued. Bitcoin’s 30-day implied volatility (BVIV) dropped 11% to 44% and has stabilized around that level, while Ether’s EVIV reflects a similar trend.

On Deribit, bitcoin put options continue to trade at a premium of more than 10% over calls across maturities, underscoring persistent demand for downside protection. Ether options show a similar short-term skew, with weekly puts priced higher than calls, while longer-dated contracts are more balanced.

Options flow included a bitcoin short straddle, a strategy typically used when traders expect low volatility and range-bound conditions.

Across the broader market, DeFi tokens struggled, while AI-related tokens such as FET, TAO, and RENDER also declined. Privacy coins ZEC and XMR came under pressure as well.

Even Hyperliquid (HYPE), despite recent outperformance, slipped about 2.2% to $65.3, suggesting consolidation following its rally rather than a deeper pullback.

On the upside, Stellar Lumens (XLM) gained after news that DTCC plans to connect its tokenized securities platform to the Stellar network by 2027, extending bullish momentum from its May rally.

Lighter (LIT) also outperformed, benefiting from rising interest in decentralized perpetual exchanges, climbing 23% over the past week with strong double-digit gains in the last 24 hours.