Major Tokens Including BTC, ETH, XRP Slide, Monitors Awash With Red

The cryptocurrency market wilted early Monday, with losses in bitcoin BTC$112,543.14, ether (ETH) and other major cryptocurrencies triggering the liquidation of leveraged bets worth $1.5 billion.

The decline followed a supposedly dovish Fed interest-rate cut, which was expected to send the dollar index lower and encourage more risk-taking in crypto markets.

“In recent days, there have been several signals of a shift to a downward trend in the first cryptocurrency,” Alex Kuptsikevich, chief market analyst at the FxPro, said in an email. “BTCUSD fell out of the upward channel that had been in place since early September, dropped below horizontal support and fell sharply below the 50-day moving average.

“This combination of negative signals suggests a further decline is likely unless there is a fundamental change in financial market sentiment.”

Derivatives Positioning

By Omkar Godbole

• The top 20 tokens, except for BTC and HYPE, have seen double-digit declines in futures open interest as the price drops shake out overleveraged bets.
• Shorts seem to be stepping in via Binance-listed USDT futures, as OI has increased to 276K BTC from 270K alongside near-zero funding rates in the past couple of hours.
• Funding rates in TRX, ADA, LINK, TON, UNI and Binance-listed 1000SHIB futures are notably negative, indicating a bias for bearish, short positions. Funding rates for other majors, including BTC, are flat to slightly positive.
• BTC front-month futures on the CME still trade at a roughly $100 premium to the spot price. Traders need to watch out for a potential shift into discount for signs of strengthening of selling pressure.
• On Deribit, put premiums relative to calls have spiked, as the price drops bolster demand for downside protection.
• Sentiment in the XRP and SOL options has flipped bearish too, aligning with BTC and ETH markets.

Token Talk

By Oliver Knight

• A number of altcoins were dealt double-digit moves to the downside on Monday, with the likes of PUMP, RAY, CRV and TIA all sliding to their lowest in over a month.
• The sell-off was made worse by a $1.6 billion liquidation cascade, with $500 million occurring on ether (ETH) trading pairs, according to CoinGlass.
• Funding rates for ether flipped negative, which means short traders are paying to hold their position, demonstrating a shift in sentiment following ETH’s rally from $2,400 at the start of July to $4,831 in late August.
• It’s worth noting that crypto majors like BTC, ETH and SOL are now at respective levels of support and as sentiment has flipped bearish, a recovery could be staged to target traders being overly aggressive in short positions.
• The average crypto token relative strength index (RSI) is also at 28.4 out of 100, indicating heavily oversold conditions that will likely lead to a relief rally, unless ETH and BTC break their levels of support.