Zcash and Hyperliquid tokens have declined over 10% as traders anticipate a drop in Bitcoin prices, which has fallen below $61,500.
The cryptocurrency market is experiencing significant downward pressure as traders brace for critical U.S. inflation data later today. Bitcoin has fallen below $61,500, trading under its 200-week moving average, a level that some analysts associate with prolonged bearish trends.
Privacy-focused Zcash (ZEC) and Hyperliquid's HYPE token have each dropped more than 10% in the past 24 hours, reflecting a growing risk-averse sentiment across the market. Other cryptocurrencies, including Cardano (ADA), ONDO, and Bitcoin Cash (BCH), also saw declines exceeding 4%, contributing to a 3% drop in the CoinDesk 20 Index during the same period.
Bitcoin's price has retreated to around $61,412.97, nearly negating the gains from a recent rally that lifted prices above $64,000. Analysts note that trading below the 200-week simple moving average might indicate a longer bearish phase. Alex Kuptsikevich, chief market analyst at FxPro, remarked on the historical significance of this indicator, suggesting that it could signal an extended bear market.
Derivatives Market Insights
In the derivatives market, crypto futures trading volume rose by 1.2% to $193 billion, while open interest decreased by 1.5% to $102.27 billion. Liquidations spiked by 38% to $418 million, mainly affecting long positions as Bitcoin approached the $61,000 mark.
Despite the price drop, open interest for Bitcoin futures increased to 728,000 BTC, indicating that new short positions are being established in anticipation of further declines. This trend is supported by negative funding rates and a bearish sentiment prevailing across other major cryptocurrencies, including Ethereum (ETH) and XRP.
The implied volatility index for Bitcoin has also risen to 51.21%, reflecting heightened uncertainty ahead of the U.S. Consumer Price Index announcement. Options for both BTC and ETH are trading at a premium, indicating ongoing demand for downside protection.
Market Developments
In a notable development, the total value locked (TVL) in Uniswap V4 surged by over 350% in a single day, which was initially perceived as a significant liquidity influx. However, this spike was later attributed to a hacked token that inflated the dashboard metrics without representing actual deposits. Furthermore, the token for Morpho gained 12% after successfully raising $175 million in funding, although it later experienced a price correction.
Amid the current selloff, market analysis firm Santiment noted that recent buyers of various tokens are largely at a loss, indicating that the market may be entering a historically significant buy zone. The 30-day market value to realized value (MVRV) metric shows losses for Bitcoin, Ethereum, Chainlink, and XRP, suggesting these may be considered "fair buy" opportunities, while Cardano is viewed as a "strong buy."
