Bitcoin and the broader crypto market tumbled on Monday, triggered by a sharp sell-off shortly after the CME bitcoin futures market reopened. The CoinDesk 20 Index fell nearly 6% over 24 hours, reflecting heightened market volatility and lingering liquidity concerns.
The downturn comes as crypto markets continue to navigate thin liquidity conditions, still recovering from October’s $19 billion liquidation cascade. Adding to the pressure, Bank of Japan Governor Kazuo Ueda signaled a possible interest-rate hike this month, sending Japan’s 30-, 10-, and 2-year government bond yields to levels not seen since 2008. A stronger yen could prompt hedge funds that borrow the currency to invest in risk assets like bitcoin to adjust their positions, amplifying selling pressure.
Derivatives and volatility
- Crypto futures saw significant outflows, with open interest (OI) in tokens such as ZEC, SUI, UNI, and ENA dropping over 10% in 24 hours.
- Bitcoin’s OI declined by 2%, while ether’s rose slightly to 12.51 million ETH—the highest since Nov. 21—suggesting shorting activity amid the price drop.
- Funding rates across major tokens, including SOL, BBB, XRP, AVAX, and DOT, turned sharply negative (-7% to -11% annualized), reflecting a bearish bias.
- Volmex’s 30-day bitcoin implied volatility index (BVIV) spiked above 55% during Asian trading hours before easing to 53%, signaling renewed fear.
- Deribit options activity showed strengthening put skews in short- and near-dated BTC and ETH contracts.
- Block trades highlighted BTC strangles and ETH straddles, indicating trader anticipation of heightened volatility.
Altcoin losses deepen
Altcoins were particularly hard-hit. ZEC plunged 20%, ENA dropped 16%, and TIA fell 14% over the past 24 hours. Out of $637 million in total liquidations, altcoins accounted for more than $430 million, extending downtrends that began in early October.
The market now faces a critical juncture: a breach of November’s lows would confirm a broader bearish reversal from October highs. However, the average relative strength index (RSI) suggests oversold conditions, raising the possibility of a relief bounce as traders in short positions take profits.
A few tokens bucked the trend over the past week. Layer-1 token KAS gained 29%, while SKY (formerly MKR) rose 17% following a series of buyback announcements. Despite these gains, the altcoin season index remains subdued at 24/100, down sharply from September’s 78/100, signaling that investors continue to favor bitcoin’s stability and liquidity in volatile markets.
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