Bitcoin and ether increase while altcoins trail in subdued trading conditions.

Bitcoin and ether see slight increases, yet a weak altcoin performance, significant liquidations, and high options hedging indicate that traders are still apprehensive.

Bitcoin and ether increase slightly, while altcoins falter (marcelkessler/Pixabay modified by CoinDesk)

Key points:

• BTC is priced near $67,000 and ETH around $1,970, as volatility diminishes following the selloff on February 5.
• Derivatives indicate stabilization, with open interest at $15.38 billion and positive funding.
• Heightened short-term implied volatility reflects caution.
• Liquidations amounting to $218 million and 97 out of the top 100 tokens in decline highlight fragile market sentiment.

Bitcoin BTC$66,744.96 and ether (ETH) both gained approximately 0.9% overnight, while the wider altcoin sector underperformed on Thursday.

BTC was last seen trading at $67,000 after briefly reaching $66,000 on Wednesday. Ether, currently at $1,970 after rebounding from $1,924, is finding it challenging to surpass the psychological $2,000 mark.

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Volatility has lessened since the selloff on February 5. The following two weeks of consolidation have left investors questioning whether this is a period of calm before another downturn or if the market is setting a macro low before a potential rise toward 2025 levels.

Despite the attendance of CFTC Chairman Michael Selig and executives from firms like Goldman Sachs, the World Liberty Financial’s Mar-a-Lago forum on Wednesday did not create a bullish impetus.

From a broader view, bitcoin has been on a downward trajectory since reaching an all-time high of $126,600 in early October. It has recorded a series of declining highs and lows, interspersed with phases of volatile consolidation between significant movements.

Derivatives positioning

• Market conditions have stabilized, with open interest remaining at $15.38 billion.
• This represents a shift from a leverage cleanup to a solid floor.
• Retail sentiment is showing a slight recovery, with funding rates returning to flat or positive (Binance back at 4%), while institutional confidence remains steady, as the three-month annualized basis holds at 3%.
• The BTC options market has achieved a balanced volume between calls and puts at 50/50. Although the one-week 25-delta skew has increased to 12%, the implied volatility (IV) term structure is still in short-term backwardation.
• The front-end spike in the IV curve indicates that traders are still paying a “panic premium” for immediate protection, even as longer-dated tenors stabilize around 49%.
• Coinglass data reveals $218 million in liquidations over the past 24 hours, with a 77-23 ratio between longs and shorts. BTC ($75 million), ETH ($53 million), and others ($22 million) led the way in terms of notional liquidations.
• The Binance liquidation heatmap points to $67,400 as a key liquidation level to watch in case of a price increase.

Token talk

• The altcoin market is beginning to experience difficulties in the low-liquidity trading environment.
• Tokens of WLFI$0.1172 declined by over 10% after a selloff during Wednesday’s event, exhibiting a typical “sell the news” reaction.
• Axie Infinity (AXS) is revisiting its February 6 lows after experiencing a 5.9% drop since midnight UTC.
• The MORPHO token of the lending platform Morpho has now surrendered all of Wednesday’s gains, trading at $1.39 after a 4.2% decline overnight.
• An overwhelming 97 out of the top 100 cryptocurrencies, excluding stablecoins and tokenized gold tokens, are showing losses over the last 24 hours, as the market remains in “extreme fear” territory.
• The fear and greed index currently stands at 11/100, up from a low of 6/100 in February.