Key Developments
The crypto market was little changed on Thursday, with bitcoin BTC$71,553.36 and ether (ETH) posting gains of less than 1% as investors consolidated following Wednesday’s breakout.
While bitcoin crucially held above the $70,000 level that had rebuffed ealier rallies, it has failed to deliver an upside shift to $80,000 that some analysts predicted.
Market Context
Global equities responded well to reports that Iran had secretly reached out to the U.S. in hopes of making an agreement to end the war in return for limiting its missile production.
The Dollar Index (DXY) fell as a result, but remains up by 3.5% since late January as traders attempt to rationalize potential interest rate changes by the Federal Reserve. Disruption in the Strait of Hormuz would increase inflation, forcing the Fed’s hand to raise rates to keep deposits high.
What To Watch
Bitcoin typically rallies when the dollar weakens and falls when the currency is bullish.
- Bitcoin futures open interest (OI) picked up, with the tally increasing to 680K BTC, the most in almost two weeks. This pattern confirms the spot price gains.
- Ether’s OI increased to 13.41 million ether, the highest since Jan. 31. Activity in XRP futures remains subdued, with OI stuck at recent lows below 1.70 billion XRP. The same can be said for Solana’s SOL.
- OI in futures tied to gold tokens Tether gold (XAUT) and PAXG$5,001.01 continues to drop as cryptocurrencies rise. Investors could be rotating money into majors as the gold price rally stalls.
- Privacy-focused ZEC’s futures activity is also picking up, with total OI ending a two-month downtrend.
- Annualized perpetual funding rates for bitcoin and ether remain mildly positive, pointing to a bullish bias. Rates, however, remain slightly negative for XRP and SOL.
- Bitcoin and ether’s 30-day implied volatility indexes remain steady in recent ranges, indicating market stability. Wall Street’s volatility index, VIX, has pulled back to 21% from Monday’s high of 28%.
- On Deribit, put skews in bitcoin and ether options have weakened, but persist alongside increased activity in higher strike calls, or bullish bets.
- Block flows in options featured demand for call calendar diagonal spreads on bitcoin and ether.
- Layer-1 token MANTRA completed a token migration and rebrand, replacing the legacy OM token with the MANTRA ticker and implementing a 1:4 redenomination, leading to a 25% rise in token price over the past 24 hours.
- The bullish privacy token narrative at the turn of the year fell flat on its face in February as ZEC, DASH and XMR entered a deep correction, but monero (XMR) appears to now be bucking that trend, rising by 5.2% since midnight UTC and notching a 9.8% gain over the past week.
- Crypto majors dominated market gains over the past 24 hours, with the CoinDesk 5 (CF5) and CoinDesk 10 (CD10) indexes each rising around 3.1%. The DeFi Select Index and Computing Select Index were up by just 0.4% and 0.7%, respectively, over the same period.
- If bitcoin can continue to move towards $80,000 and consolidate, profits may then be rolled into more speculative altcoin bets, but for now the market remains cautious.
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