Fear Grips Market as BTC Price Tests Support, Altcoins Weaken

The crypto market showed few, if any signs, of recovery on Tuesday, with bitcoin BTC$91,599.66 trading at $91,400 while ether ETH$3,067.69 traded around $3,060.

The fear and greed index is now flashing 15/100, a low not seen since April, before the bitcoin price defied bearish expectations by surging to over $100,000 from $76,000 in the course of a month.

While there is a reason to expect a bounce given sentiment is resting at cycle lows, bitcoin may want to test the $87,500 level of support to flush out any remnants of leverage before shifting higher.

As Wall Street veteran Warren Buffet once said: “Buy when there is blood in the streets, even if it’s you’re own.”

That statement could ring true for a number of traders who are prepared to take risks at these levels, although others continue to trade emotionally and lose millions in the process, as seen by Monday’s cautionary tale about a trader who lost $5.5 million after shorting the bottom with 30-times leverage.

Derivatives positioning

• Leveraged crypto futures bets worth over $1 billion have been liquidated in the past 24 hours, with longs accounting for most of the tally. The data shows bulls continue to be crowded out.
• Volmex’s BVIV, which measures the 30-day implied volatility in the BTC price, briefly rose to an annualized 55% during Asian hours, the highest since the Oct. 10 crash.
• BTC’s global futures open interest (OI) continues to rise and has reached a six-week high of 730,550 BTC. An increase in open interest alongside a drop in the spot price is said to confirm a downtrend.
• ETH futures OI remains around 12.5 million ether.
• Perpetual funding rates for most tokens, excluding TRX, remain mildly positive despite large liquidations.
• On Deribit, a bias for puts has strengthened in BTC and ETH options. Block flows featured the BTC $90,000 strike put expiring on Nov. 28 and rollover of positions in the ETH $4,000 call options.

Token talk

• The privacy coin sector experienced a sharp sell-off, with zcash ZEC$575.01 and dash DASH$76.43 falling by 14% and 9% respectively.
• The slide outpaced the downturn seen across other altcoins, including ether ETH$3,067.69 and XRP$2.1921, which are down by about 4% over the past 24 hours.
• ASTER and HYPE, both tokens tied to decentralized derivatives exchanges, bucked the bearish market trend, rising by 8.5% and 5%.
• The wider market remains deflated: The CoinDesk 10 index, excluding bitcoin, lost 3.8% of its value over the past 24 hours, compounding the monthly loss of 19.7%.
• Traders will be exercising caution following the crypto market’s recent plunge, this could see a focus on bitcoin, historically less volatile than altcoins, as they attempt to find a safe haven.
• A series of lower highs and lower lows across several altcoin trading pairs demonstrates a class set of downtrends, although it’s worth noting that previous bull markets often contain a number of 30% corrections, so the market is not quite into crypto winter territory, yet.