The crypto market experienced a much-needed recovery following the options expiry, resulting in a rise in the market cap to $1.62 trillion. Traders took advantage of favorable indicators and conditions, such as a low put-call ratio, to buy Bitcoin and Ethereum. As a result, BTC and ETH prices rebounded, creating a positive sentiment that persisted on Saturday.
The Crypto Market Fear and Greed Index also reflected these changes in sentiment, increasing from 49 (neutral) to 55 (neutral).
Reasons for the Crypto Market’s Upward Movement
After a $5.8 billion Bitcoin and Ethereum options expiry, there was significant liquidation of shorts in the crypto market due to various factors, including technical indicators, liquidations, and macroeconomic influences.
In the past 24 hours alone, over $120 million worth of liquidations occurred, with nearly $90 million in shorts being liquidated. Among these liquidations were BTC short positions valued at over $40 million. The largest single liquidation order on Binance’s ETHUSDT amounted to $2.53 million.
Aside from Bitcoin and Ethereum, other cryptocurrencies like SOL, SUI, ORDI, TRB, MANTA, CFX, ALT, and XRP also experienced significant shorts liquidation within the past 24 hours. Consequently, SUI saw a 21% increase in price, MANTA rose by 15%, and CFX surged by 18%.
Reasons for the Rise of BTC and ETH
Bitcoin and Ethereum futures and options open interest skyrocketed after the expiry as there was substantial buying activity from the U.S. crypto market. Traders became bullish after the U.S. Federal Reserve’s preferred inflation metric showed that US PCE cooled to 2.9%, lower than the market’s expectations of 3%.
In the last 24 hours, BTC futures open interest on CME increased by 9% to $17.97 billion, with a 4% increase in the past 4 hours. Similar data was observed on Binance, Bybit, Coinbase, and Kraken. Overall, total BTC futures open interest rose by over 3% in the last 24 hours.
On the other hand, total ETH futures open interest only climbed by 0.60% to $7.87 billion in the past 24 hours. However, data suggests that U.S. traders are actively bullish.
The US 10-year Treasury (US10Y) slipped to 4.13% from six-week highs of 4.16%, and the US dollar index (DXY) approached 103.50 after key economic data was released. This recent macro data confirms that the Fed is likely to maintain the policy rate within the range of 5.25%-5.50% in the upcoming FOMC interest rate decision on January 31.
BTC’s price surged by 5% in the past 24 hours and is currently trading at $41,717. The lowest and highest prices within that period were $39,902 and $42,209, respectively. Additionally, trading volume has increased by 40% in the last 24 hours, indicating growing interest among traders.
ETH’s price is currently at $2,265, experiencing a 3% increase in the past 24 hours. The lowest and highest prices within that period were $2,196 and $2,282, respectively.
Hot Take: Crypto Market Recovery
The crypto market made a strong recovery following the options expiry event, leading to a significant rise in market cap. The ideal indicators and conditions, including a low put-call ratio, allowed traders to buy Bitcoin and Ethereum, resulting in a rebound in their prices. This positive sentiment has persisted and is reflected in the Crypto Market Fear and Greed Index. The liquidation of shorts also played a role in the market’s upward movement, with BTC and ETH seeing substantial shorts liquidation. The rise in BTC and ETH can be attributed to increased futures and options open interest after the expiry, as well as bullishness among U.S. traders. Overall, the recovery of the crypto market indicates renewed interest and optimism among traders.
By
By
By
By
By