Bitcoin bounces from $58,000 as derivatives signal more pain in the pipeline

The crypto market is clinging to a crucial level of support, with bitcoin BTC$59,382.32 barely moving since midnight UTC after rebounding from its lowest level since September 2024 on Thursday.

The largest cryptocurrency was recently trading near $59,700, having fallen as low as $58,100.

Ether (ETH) failed to mirror bitcoin's bounce, dropping a further 1% and extending its string of declines to three straight days. It recently held around $1,550.

U.S. equities also start Friday indicating weakness, Nasdaq 100 and S&P 500 futures are down by 1% and 0.4%, respectively, since midnight as the tech rally of the past three months continues to unwind.

One token that bucked the bearish market sentiment was aave AAVE$85.55, which added as much as 6.8% since midnight, building on a 17% gain over the past week after CoinDesk reported that crypto exchange Kraken was looking to acquire a 15% stake in the DeFi company.

Derivatives positioning

• Market volatility continues to weigh on leveraged futures positions. Over the past 24 hours, another $1 billion in positions were liquidated, with long positions once again accounting for the majority. Notably, ETH saw more liquidations than BTC in the past 12 hours.
• Bitcoin futures open interest (OI) rose for a second consecutive day to 778,000 BTC, a sharp increase from recent lows near 730,000 BTC. The open interest surged during Thursday’s late selloff, suggesting traders added shorts into the dip in anticipation of further downside.
• The picture is different in ether futures, where open interest has remained stable near the 14 million ETH level since at least June 15. This is somewhat constructive, as it indicates traders are not aggressively shorting the price decline. A similar pattern holds for XRP.
• Solana’s open interest has pulled back from record highs but remains elevated compared with recent months, pointing to the potential for continued volatility.
• The OI-adjusted 24-hour cumulative volume delta continues to show bearish dominance across most of the top 25 cryptocurrencies, with the notable exceptions of BNB, SOL and TON. The negative reading suggests bears are more aggressive than bulls, favoring market orders over passive limit orders. This trend has persisted since Tuesday.
• Annualized 30-day implied volatility indexes are signaling rising levels of concern. Bitcoin's BVIV index jumped to 53% early today, its highest level since June 7 and a sharp rise from the June 16 low of 39%. ETH’s index climbed to 66%.
• Wall Street’s equivalent, the VIX, has also risen to 20% from 15% recently but remains within the range seen since early April, indicating that equities are not yet in panic mode. A similar message is coming from the U.S. Treasury market’s implied volatility index, MOVE.
• On Deribit, the one-week bitcoin options skew is approaching 30%, reflecting a substantial premium for puts, or defensive positions, over calls and underscoring strong downside fears. The one- and three-month skews are conveying a similar message.
• Block flows included a large trade in the $53,000 put expiring July 10, along with demand for ether risk reversals.

Token talk

• Aave outperformed the broader altcoin market, and an honorable mention goes to solana (SOL), which has added 2% since midnight and now trades around $68.95 after tumbling to $64.05 on Thursday.
• AI tokens continue to unwind; RENDER, NEAR, FET and TAO lost between 1% and 1.5% on Friday, extending their declines.
• Hyperliquid (HYPE) also fell, dropping 2.6%. It has now lost 18.5% since touching a record high 12 days ago.
• Ethena (ENA) remains one of the worst-performing altcoins, losing another 5% on Friday. It's now dropped 34% after touching the month's high on June 3.
• ENA's plight can be attributed to the ongoing bear market, as a portion of the platform's yield-generation strategy is tied to positive funding rates, which have now flipped negative.