After the options expiry, the crypto market experienced a much-needed recovery, with its overall value increasing to $1.62 trillion. Traders had favorable indicators and conditions, such as a low put-call ratio, to purchase Bitcoin (BTC) and Ethereum (ETH). This resulted in a rebound in their prices and a persisting positive sentiment in the market on Saturday.
The Crypto Market Fear and Greed Index also saw a jump from 49 (neutral) to 55 (neutral) today, indicating quick changes in sentiment.
So, why is the crypto market up today? One of the main reasons is the recent $5.8 billion expiry of Bitcoin and Ethereum options. This caused a massive liquidation of shorts due to various factors, including technical indicators, liquidations, and macro trends.
In the past 24 hours, there has been over $120 million in liquidations, with almost $90 million worth of shorts being liquidated. The data also shows that BTC short positions worth over $40 million were liquidated. Furthermore, over 40,000 traders were liquidated, with the largest single liquidation order for ETHUSDT on Binance worth $2.53 million.
Apart from BTC and ETH, other cryptocurrencies like SOL, SUI, ORDI, TRB, MANTA, CFX, ALT, and XRP also saw significant liquidations of shorts in the past 24 hours. As a result, SUI rose by 21%, MANTA by 15%, and CFX by 18%.
Additionally, there is a 60% chance that the Spot Ethereum ETF will be approved by May 23, as per recent reports. Otherwise, it may take until 2025 for approval.
The rise in BTC and ETH prices can also be attributed to the surge in futures and options open interest after the expiry, with major buying activity from the US market. The Federal Reserve’s preferred inflation metric, US PCE, also cooled down to 2.9%, lower than the market’s expectations of 3%, which turned traders bullish.
In the past 24 hours, CME’s BTC futures open interest has increased by 9% to $17.97 billion, and over 4% in the last 4 hours. Similar data was also observed on Binance, Bybit, Coinbase, and Kraken. The total open interest for BTC futures has risen by more than 3% in the last 24 hours.
On the other hand, the total open interest for ETH futures has only increased by 0.60% to $7.87 billion in the past 24 hours. However, the data shows that US traders are actively bullish.
The US 10-year Treasury (US10Y) has slipped to 4.13% from six-week highs of 4.16%, while the US dollar index (DXY) is moving near 103.50 after key economic data. This indicates that the Fed is likely to maintain the policy rate at 5.25%-5.50% in the upcoming FOMC interest rate decision on January 31.
Currently, BTC is trading at $41,717, with a 5% increase in the past 24 hours. Its 24-hour low and high are $39,902 and $42,209, respectively. Moreover, the trading volume has also increased by 40% in the last 24 hours, indicating a rise in interest among traders.
ETH is currently trading at $2,265, with a 3% increase in the past 24 hours. Its 24-hour low and high are $2,196 and $2,282, respectively.
In conclusion, the crypto market has seen a significant recovery after the options expiry, with BTC and ETH leading the way. The rise in prices can also be attributed to favorable market conditions, such as a low put-call ratio and the Fed’s recent inflation data.
