Crypto recovers as oil prices decline following Trump remarks, yet derivatives indicate lack of strong confidence.

Bitcoin and ether increase along with altcoins, although subdued open interest indicates that the rally may depend more on spot demand and short covering than on significant leverage.

Oil rig operating during the sunset (Maria Lupan/Unsplash)

Key points:

• Bitcoin and ether experienced slight gains, with altcoins such as Algorand seeing significant increases, contributing to overall market improvements.
• Futures data indicates a rise in volume but stagnant open interest, suggesting the rally is not underpinned by a robust leveraged conviction.
• Heightened leverage in ETH and ZEC elevates the likelihood of a downturn if macro sentiment turns against the recent optimism.

On Wednesday, cryptocurrency markets surged as oil prices briefly dipped below $100 per barrel following U.S. President Donald Trump’s assertion that the conflict in Iran would conclude in “two to three weeks.”

Bitcoin BTC$68,481.30 is trading at $68,500, having increased by 0.4% since midnight UTC and 3.1% in the last 24 hours, while ether (ETH) has rebounded to $2,130 after briefly dipping below $2,000 last week.

The overall cryptocurrency market has been in a downward trend since October, although sentiment has improved slightly after a consolidation phase between $62,500 and $75,000 that began in early February.

A number of altcoins have shown particularly strong performance, with Algorand (ALGO) rising by 22% in the past 24 hours as it recovers from oversold conditions.

Derivatives positioning

• The crypto futures market seems to be fluctuating without establishing clear directional stances, as trading volumes have increased by 23% to $210 million over the past 24 hours, while open interest has remained largely unchanged at approximately $106 billion.
• Open interest in significant USD- and USDT-denominated futures has noticeably diverged from BTC’s rebound from the weekend low of around $65,000. This implies that the recovery is not backed by a substantial increase in leveraged positions, but rather by spot demand or short covering, indicating a lack of strong conviction behind the rally.
• Ether’s open interest has increased slightly in line with its spot price, indicating involvement from leveraged traders.
• ETH and ZEC are highlighted as major cryptocurrencies exhibiting positive open interest-adjusted CVD and funding rates. This combination suggests active bidding in the futures market, with traders frequently opening long positions and incurring a premium to maintain them.
• Conversely, the market for ADA, XMR, BCH, and SHIB does not reflect the same sentiment.
• Implied volatility indices for Bitcoin and Ether continue to convey a sense of stability.
• On Deribit, risk reversals demonstrate a preference for BTC and ETH put options, which provide protection against potential price declines. Bearish sentiment is somewhat more evident in BTC options.

Token discussion

• The CoinDesk Computing Select Index (CPUS) was the top-performing benchmark on Wednesday, increasing by 2.7% since midnight UTC, while the CoinDesk Smart Contract Platform Select Capped Index (SCPXC) and the DeFi Select Index (DFX) each rose by 1.5%.
• Bitcoin, along with the major-dominant CoinDesk 5 (CD5) and CoinDesk 20 (CD20), saw increases of 0.35% and 0.69% respectively, indicating underperformance compared to the broader altcoin market.
• Algorand (ALGO) led the market gains on Wednesday, closely followed by decentralized finance (DeFi) tokens MORPHO and JUP, which recorded double-digit increases.
• A significant rise in open interest for assets such as ETH and ZEC suggests that the recent movement has been supported by leverage rather than spot buying, which could reverse if news contrary to Trump’s statement emerges this week.