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$60,235.14 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$85.34, 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.