Negative outlook persists as bitcoin dips below $67,000, ether declines.

Bitcoin and ether continued their downward trend, impacting crypto-related stocks, while gold and silver experienced gains.

(CoinDesk)

What to know:

• Bitcoin and ether continued their downward trend, impacting crypto-related stocks, while gold and silver experienced gains.
• Data from derivatives indicates a prolonged deleveraging in bitcoin futures, with negative funding rates, a decline in institutional interest, and a heightened options skew indicating defensive positioning despite some opportunistic buying.
• Onchain lender Spark launched new institutional offerings that connect offchain, custodied assets to DeFi markets, managing over $9 billion in stablecoin liquidity as its SPK token surpasses the overall crypto market performance.

Bitcoin BTC$67,047.79 decreased by 2.4% over the last 24 hours to approximately $66,900, while ether ETH$1,954.79 fell by 2.7%, trading below the $2,000 mark. The broader CoinDesk 20 (CD20) index decreased by 3.7%.

The downturn affected crypto-related stocks. Coinbase (COIN) saw a decline of about 4% in pre-market trading, while competing exchange Bullish (BLSH), which owns CoinDesk, dropped 2.3%. Bitcoin treasury companies Strategy (MSTR) and Strive (ASST) also fell by approximately 2.3%. Additionally, trading platform Robinhood (HOOD) decreased by 4.7% after reporting a 38% decline in fourth-quarter crypto earnings.

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In contrast, gold prices rose by approximately 0.9% to $5,070 an ounce, while silver increased by over 5% following weaker-than-anticipated U.S. retail sales data that suggested a decrease in consumer demand.

The dollar weakened, and Treasury yields decreased as investors adjusted their forecasts regarding interest rate reductions. On Polymarket, the likelihood of a Federal Reserve rate cut in March has increased from 7% to around 19% since the start of the month. On Kalshi, these odds have reached 21%.

Derivatives Positioning

• Bearish momentum in BTC futures is increasing, with open interest decreasing further to $15.6 billion.
• This decline indicates a prolonged deleveraging period, highlighted by funding rates dropping deeper into negative territory on Binance (-6%) and Bybit (-0.50%), while a shrinking three-month basis (now at 1.6%) suggests rapidly declining institutional interest.
• The bitcoin options market continues to exhibit high defensive caution as the one-week 25-delta skew has risen to 23%, even as call dominance remains stable at 55%, indicating some opportunistic buying is occurring.
• Despite this localized tension, the implied volatility term structure remains stable, maintaining its hybrid state between backwardation and contango as the market balances high near-term protection costs with stabilized long-term volatility expectations.
• Coinglass data indicates $297 million in liquidations over 24 hours, with a 77-23 division between longs and shorts. BTC ($121 million), ETH ($89 million), and others ($16 million) led in terms of notional liquidations.
• The Binance liquidation heatmap shows $66,100 as a key liquidation level to watch in the event of a price decline.

Token Talk

• Spark, the onchain capital allocator developed by Sky, launched two new lending products aimed at institutional borrowers, designed to connect the $33 billion offchain crypto lending market with decentralized finance.
• The products, Spark Prime and Spark Institutional Lending, broaden the platform’s reach beyond users native to decentralized finance.
• Spark Prime enables institutional clients to engage in margin trading and settle off-exchange while utilizing collateral across both centralized and decentralized platforms.
• Spark Institutional Lending is tailored for firms needing regulated custody. By integrating with custodians like Anchorage Digital, institutions can borrow against assets held offchain, accessing Spark’s onchain markets without needing to move capital onchain.
• Spark currently oversees over $9 billion in stablecoin liquidity within DeFi and maintains $5.2 billion in total value locked, according to data from DefiLlama.
• Spark’s native token SPK, which allows holders to govern the allocation and risk parameters for these products through the DAO, has risen more than 2% in the past 24 hours, outperforming the broader market.