Bitcoin encounters $80,000 resistance as derivatives markets signal risk aversion
Bitcoin is experiencing profit-taking pressure near the $80,000 mark, influenced by upcoming U.S. inflation data, high oil prices, and rising bond yields that are pressuring risk assets.
What to know:
— Bitcoin is facing profit-taking pressure near $80,000 with looming U.S. inflation data, high oil prices, and rising bond yields impacting risk assets.
— Derivatives markets indicate risk aversion, with declining open interest, significant long liquidations, muted volatility, and market makers likely selling rallies around $80,000, pointing to potential deeper price drops.
— Memecoin platform Pump.fun is launching Charity Coins to direct creator fees to verified nonprofits while scaling back its PUMP token buy-and-burn program, as the token underperforms the broader CoinDesk 20 index.
Bitcoin
According to Luke Deans, a senior research associate at Bitwise, short-term holders have a cost basis around that price. A move above may convince them to take profits and sell, capping any advance.
Another headwind may present itself in the form of U.S. March PCE inflation, which lands as oil prices keep pressure on risk assets. West Texas Intermediate crude has surged to as high as $110, and reduced traffic through the Strait of Hormuz has kept energy markets fragile.
Wednesday’s Federal Reserve decision to hold the federal funds rate steady is also weighing on the market. Specifically, a whopping four dissenting voices, the most since 1992, with one governor pushing for a cut and three regional presidents opposing the statement’s suggestion that the Fed would resume easing.
Deans also said altcoins remain tied to bitcoin, with the 180-day correlation and beta percentiles near 97% and 99%. That means tokens may move like levered bitcoin trades today.
“Beneath the surface, conditions typically associated with rising volatility appear to be forming,” Deans said. “Liquidity remains subdued, with profit- and loss-taking largely offsetting each other, reflecting a lack of directional conviction.”
In these environments, he said, price moves are often needed to unlock new liquidity.
Derivatives positioning
— Market-wide, futures open interest (OI) has dropped over 2% to $119 billion in 24 hours. Trading volumes, however, have increased 26% to $208 billion. The combination indicates that positions are being closed and capital is fleeing the market, a sign of risk aversion.
— Over $500 million in leveraged bets have been liquidated by exchanges, of which most are longs, or bullish positions. The market weakness amid rising bond yields has clearly caught bulls off guard.
— OI has dropped 2% in bitcoin futures and and 1.7% in ether. Similar declines are seen across most majors, except DOGE, whose OI still hovers at six-month highs.
— With the exception of XMR, XLM, TRX and CC, most coins, including the two largest, have seen sellers hit bids more than buyers lifting offers, leaving the 24-hour cumulative volume delta in the negative. In short, sellers are being more aggressive, which suggests potential for deeper price declines.
— Bitcoin’s 30-day implied volatility index, BVIV, has dropped to 41%, extending the slide from the February high of 97%. Right now, the index is at its lowest since Jan. 29. Once again, this is telling a tale of a market that’s become desensitized to adverse macro developments such as rising bond yields and elevated oil prices. Ether’s volatility index shows a similar pattern.
— On Deribit, BTC and ETH protective puts remain pricier relative to calls. The large concentration of open interest in bitcoin’s $80,000 call has created long (positive) gamma dynamics, suggesting that market makers may sell rallies into and above that level to hedge their books. This could slow potential upswings.
— Bitcoin’s options term structure shows less near-term stress, with traders pricing more uncertainty further out rather than in the immediate future.
— Block flows featured a large BTC put spread involving strikes $72,000 and $65,000, according to Amberdata. The strategy shows expectations for a renewed price drop to $65,000 or lower.
Token talk
— Memecoin launchpad Pump.fun is adding a way for creators to send fees to charities, as its PUMP token trades lower following a major change to its revenue policy.
— The feature, called Charity Coins, lets coin administrators pick a verified charity inside Pump.fun’s creator fee settings. The platform leveraging it, Donate.gg, supports more than 10,000 charities.
— The goal is to reduce disputes between traders and coin admins when a token forms around a charitable cause. The platform’s current main fundraiser is currently at $12,800 for St. Jude Children’s Research Hospital.
— Pump.fun also said it will stop using all revenue to buy and burn PUMP. Instead, it will now send 50% of future net revenue to automatic buybacks and burns for one year, while keeping the rest for hiring, product work, marketing and possible deals.
— The changes come during a rough stretch for PUMP. The token is down more than 7% over the past 24 hours, compared with a 2.2% drop in the broader CoinDesk 20 (CD20) index.