Bitcoin continued to hold above $63,000 after rebounding on Sunday, with the market currently focused on its performance near the 200-week simple moving average. This level has historically served as significant support near cyclical turning points. While short-term stabilization has emerged, whether the trend has completely reversed remains to be seen.
Approaching the 200-week moving average
This rebound is related to Strategy's Executive Chairman, Michael Saylor, reiterating his intention to increase his holdings. Given Strategy's long-term and consistent Bitcoin purchases, Saylor's statements are typically seen by the market as a significant sentiment signal.
However, from a price perspective, Bitcoin remains in a critical area. Alex Kuptsikevich, Chief Market Analyst at FxPro, stated that the current price action is similar to that of mid-2022: downward momentum may be weakening, but a true trend reversal may not be imminent.
Leveraged positions have contracted significantly.
Derivatives data reflects a clear clearing of market leverage following last week's sharp decline. Bitcoin futures open interest fell from a high of 901,000 BTC four days ago to 716,000 BTC, indicating that a large number of leveraged long positions were forced to liquidate during the decline.
Ethereum saw a similar change, with open interest falling from 15.98 million ETH at the end of last month to 14.58 million ETH. This decline in open interest suggests that the recent drop was driven more by long liquidation than by large-scale, proactive short-selling.
Volatility has declined, but risks have not disappeared.
Short-term pressure in the options market has also eased. The Bitcoin 30-day annualized implied volatility index (BVIV) has fallen from nearly 59% last Friday to 50%, and Ethereum's implied volatility has also dropped from 75% to 69%. This indicates that the panic following the sharp fluctuations is cooling, and conditions for the market to enter a consolidation phase have improved.
The five most actively traded options contracts on Deribit in the past 24 hours were all call options, including a Bitcoin call option expiring on December 25 with a strike price of $170,000. This indicates that some traders are still betting on continued upward movement throughout the year.
However, the risks have not completely subsided. The report points out that the gamma structure of market makers around $60,000 could still amplify price volatility. If prices deviate rapidly from this area, market makers may trade in the direction of the trend to hedge their positions, thus exacerbating either upward or downward movements.
Changes in other tokens and stablecoins
Individual tokens also experienced independent fluctuations. Bitcoin Cash open interest increased by over 13% in the past 24 hours, reaching 1.64 million BCH, the highest level since July 2023, but the price fell by 8.3% during the same period. This combination typically indicates an increase in short positions.
Zcash has rebounded 45% from last week's low. This is due to a developer-proposed fix called Ironwood, which plans to migrate users to a new privacy pool to address a previously disclosed critical forgery vulnerability.
Regarding stablecoins, USDT briefly surpassed Ethereum in market capitalization over the weekend. Previously, Ethereum's price fell from $2,000 to just over $1,500 from Friday to Sunday, reducing its market capitalization to approximately $183 billion, lower than USDT's approximately $186 billion. Ethereum subsequently rebounded, and its market capitalization returned to above USDT's.
