Bitcoin pauses as gold rises amid risk aversion, with altcoins seeking to break higher: Crypto Markets Update

Cryptocurrency Market Overview

On Friday, the cryptocurrency market remained relatively stable, with bitcoin (BTC) trading at $88,950 and ether (ETH) slipping about 1% since midnight UTC to $2,920.

This movement mirrored the performance of U.S. stock markets, as futures for the Nasdaq 100 and S&P 500 fell by 0.4% and 0.25%, respectively, during the same timeframe.

Meanwhile, gold and silver continued their upward momentum, reaching new record highs this week as investors sought safer assets, reflecting a cautious approach in the broader financial markets.

This risk-averse sentiment is partly attributed to the first trilateral discussions between Ukraine, Russia, and the U.S. on Friday, with market participants appearing skeptical about a swift resolution to the ongoing conflict.

Despite the overall subdued market, some altcoins showed resilience. LayerZero's ZRO token surged 12% in the last 24 hours, fueled by anticipation of a significant upgrade in early February. TRX and DASH also posted gains of around 3% each.

Derivatives Market Insights

• Over the past 24 hours, more than $200 million in crypto futures positions were liquidated, with the majority being long (bullish) bets. This trend has persisted throughout the week as price declines caught bullish traders by surprise.

• The 30-day annualized implied volatility index for bitcoin (BVIV) dropped back to 40%, reversing a brief spike to 44% earlier in the week. This decline highlights ongoing interest in volatility-selling strategies, such as covered calls.

• Ether was the only major cryptocurrency to see a modest increase in futures open interest over the last day, while other leading tokens, including BTC, ETH, XRP, and SOL, experienced capital outflows.

• According to the OI-adjusted cumulative volume delta indicator, there was net buying activity in TRX, ZEC, and BCH markets, whereas BTC and other markets saw net selling.

• On Deribit, short-term and near-term put options for ether (ETH) are priced higher than those for bitcoin, suggesting traders are more bearish on Ethereum's native asset.

• Block trades showed a preference for BTC straddles, which are bets on increased volatility, as well as ETH put spreads.

Token Highlights

• The altcoin season index climbed to 29 out of 100 from 24 over the past week, as traders sought opportunities in an otherwise quiet market.

• The CoinDesk 20 (CD20) Index, which is heavily weighted toward bitcoin, declined by about 0.6% since midnight UTC. In contrast, indices tracking memecoins, DeFi, and metaverse tokens all posted gains.

• Liquidity remains a challenge in the altcoin space. For example, the 2% market depth for toncoin (TON) ranges between $580,000 and $700,000, meaning a trade of that size could shift the $3.7 billion market by 2%.

• However, if the broader crypto market begins to rally, altcoins could see outsized gains due to the limited number of sell orders currently available.

• Metaverse tokens continue to outperform other sectors this year. The CoinDesk Metaverse Select Index (MTVS) has surged 50% since January 1, driven by strong results from axie infinity (AXS) and the sandbox (SAND).