Bitcoin extends downtrend as risk appetite remains muted

The crypto market slipped overnight, with bitcoin BTC$86,208.28 dropping 1.5% from the high it hit in the early hours of Wednesday.

The broader market followed suit. The CoinDesk 20 (CD20) fell 1.6% since midnight UTC with all members of the index declining.

Bitcoin’s sell-off after failing to break above $94,700 last week has extended a downtrend that started in early October with a series of lower highs.

In order to break the bearish trend and stage a recovery, the largest cryptocurrency needs to trade back above $95,000 and ideally $98,000, although year-end catalysts remain absent.

Much of the market is, however, in “oversold” territory according to the average crypto relative strength index (RSI), which is at 38.49/100, indicating the potential for a short-term relief rally.

Derivatives positioning

• BTC’s 30-day implied volatility, represented by Volmex’s BVIV, remains below an annualized 50%, suggesting market calm ahead of Thursday’s U.S. inflation data and Friday’s Bank of Japan rate decision.
• BTC’s 90-day historical volatility is now consistent with major tech stocks such as Tesla and Nvidia, a sign of market maturation.
• BTC/USD longs on Bitfinex have hit highest since February.
• Open interest (OI) in futures tied to most tokens, including BTC and ether ETH$2,840.05, has declined over 24 hours. BCH, UNI and NEAR stand out with moderate increases in OI.
• On Deribit, put writing at bitcoin’s $85,000 strike and call writing at $95,000 and $100,000 strikes point to expectations for a broad range play in the near term.
• Block flows featured straddles and risk reversals in BTC and call calendar spreads in ether.
• Broadly speaking, both BTC and ETH puts remain pricier than calls, pointing to persistent downside concerns and call overwriting.

Token talk

• The altcoin market continues to exhibit weakness against bitcoin trading pairs with bitcoin dominance rising to 58.7% from 57.8% on Nov. 26.
• ASTER and TAO are the two worst-performing altcoins out of the top 100, posting a 6.5% and a 6.1% move to the downside since midnight UTC.
• The plunge in ASTER extends a bearish trend since the weekly candle open on Monday, with a slide in excess of 20% as the hype around BNB Chain derivatives exchanges continues to wane.
• There were a handful of bullish outliers in the altcoin market, these included monero XMR$429.39, up by 0.2% since midnight and Cardano’s privacy token, NIGHT, which rose by more than 5% mid-morning in Europe.
• The “altcoin season” indicator is at 19/100 as the market firmly remains focused on bitcoin since October’s liquidation wipeout.