Cryptocurrency market recovers following downturn that lowered bitcoin to its lowest point since October 2024.

A severe selloff in the cryptocurrency market wiped out $2.6 billion in leveraged positions, drove bitcoin down to $60,000, and resulted in a significant oversold condition in the markets.

(Yashowardhan Singh/Unsplash modified by CoinDesk)

Key points:

• The drop in bitcoin to $60,000 was its lowest mark since October 2024 and registered one of the most significant oversold readings in its history, frequently indicating a potential for sharp recoveries.
• In a span of 24 hours, over $2.6 billion in futures positions were liquidated, predominantly long positions, as critical support around $70,000 was breached and open interest plummeted.
• Altcoins and decentralized finance (DeFi) experienced the most damage, although some resilience was noted in tokens such as DCR and HYPE, while investors shifted focus back to bitcoin and stablecoins.

The selloff on Thursday was among the most severe and catastrophic in the history of the cryptocurrency market, resulting in over $2.6 billion being liquidated as bitcoin BTC$66,271.05 fell to $60,000, marking its lowest level since October 2024.

This decline positioned bitcoin as the third most “oversold” asset in its history, according to the relative strength index (RSI), a momentum oscillator that monitors market conditions. Such extreme oversold conditions have historically preceded significant recoveries.

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The outlook improved slightly as Asia began its trading day, with bitcoin recovering from $60,000 to over $65,000, while ether ETH$1,922.20 rebounded from a low of $1,750 to trade at approximately $1,920.

Nonetheless, the overall cryptocurrency market continues to experience a bear trend. The privacy coin zcash ZEC$224.91 has declined by 34% in the last week, while optimism OP$0.1733, solana SOL$81.08 and ether have all faced declines of approximately 30%.

Conventional markets have also faced challenges in recent days. The Nasdaq 100 index has decreased by 6% since January 28, and precious metals like gold and silver have fallen by 12% and 38%, respectively, within the same timeframe.

Derivatives positioning

• The crypto futures market has dropped below $100 billion for the first time since March 2025, as traders scale back risk amid falling prices and liquidations that have caused significant wealth loss.
• In the last 24 hours, over $2.6 billion in leveraged futures positions were liquidated, or forcibly closed, due to margin constraints. Of this amount, more than $2.10 billion comprised long positions, reflecting the extent of bullish leverage utilized around the critical $70,000 support level that was breached on Thursday.
• Open interest (OI) has declined for futures associated with all major tokens, including the recently strong performer HYPE.
• Annualized perpetual funding rates for major tokens such as BTC, SOL, XRP, and DOGE have turned negative as price declines prompted increased demand for bearish positions. These negative rates may lead arbitrageurs to engage in reverse cash and carry strategies.
• Bitcoin’s annualized 30-day implied volatility surged to nearly 100% late Thursday as traders rushed to purchase put options, with some acquiring these bearish positions at strike prices as low as $20,000. Since then, volatility has retreated to below 70%. A similar trend has been observed in ether’s implied volatility.
• Nevertheless, both bitcoin and ether short-term put options continue to trade at a volatility premium of over 20 points compared to calls, indicating persistent concerns regarding downside risk. Puts also remain more expensive at the longer end of the curve.
• Options related to BlackRock’s IBIT ETF experienced record trading activity on Thursday, with traders hurrying to buy put options. The one-year skew increased to over 25 points, indicating a substantial premium for put options and suggesting heightened fear in the market.

Token talk

• The altcoin market displayed a few unexpected winners even amidst the broader market downturn on Thursday. The privacy-focused decred DCR$24.07 increased by 31% within 24 hours, seemingly unaffected by the turmoil, adding to a rally that has seen it rise from $17.4 to $24.2.
• HyperLiquid’s HYPE token continues to show relatively strong performance, remaining up 11% this week despite a 4% drop in the past 24 hours.
• XRP exhibited significant volatility, plummeting over 30% before recovering by 21%. Trading volume soared to over $14 billion, marking a 143% increase within 24 hours.
• The CoinDesk 20 (CD20) and CoinDesk 80 (CD80) both experienced declines of around 6% in the last 24 hours, while the DeFi sector faced more significant challenges, with the DeFi Select Index (DFX) underperforming the overall market with a drop exceeding 10%.
• According to CoinMarketCap’s “altcoin season” indicator, the score has fallen to 24/100, down from a peak of 32/100 on Wednesday, indicating that investors are favoring safer, less volatile assets like bitcoin or stablecoins.