Bitcoin stabilized after Tuesday’s sharp selloff, mirroring broader risk-off trends in equities, while altcoins faced deeper losses amid heightened volatility.
Following a wave of selling that pushed bitcoin to a low of $87,760, the cryptocurrency has recovered modestly and was recently trading near $89,000. This places it back within the range that has largely held since Nov. 20, apart from a brief five-day surge last week when prices climbed toward $98,000 after a strong start to the year.
The decline coincided with rising risk aversion in traditional markets. Nasdaq 100 and S&P 500 futures are both down roughly 2% since Sunday’s open, following Wall Street’s steepest single-day drop since October.
Safe-haven assets rallied in response. Gold and silver hit fresh record highs as investors sought protection amid renewed concerns over a U.S.-EU trade dispute. President Donald Trump’s threat of tariffs over Greenland, combined with retaliatory proposals from European officials, added to market uncertainty.
Thin liquidity in crypto markets intensified losses in altcoins. According to CoinGlass, about $500 million in altcoin futures positions were liquidated over the past 24 hours.
Derivatives Update
Bitcoin faced heavy liquidations during Tuesday’s dip, with $324 million in long positions wiped out, while roughly $34 million in short positions were liquidated during the subsequent rebound.
Bitcoin’s 30-day implied volatility spiked to 44.34 on Tuesday, its highest since Jan. 10, as traders sought to hedge through options. Open interest in bitcoin futures fell 3.25% to $28.3 billion alongside a roughly 2% price drop. A $300 million decline in open interest around 05:00 UTC coincided with a brief push back toward $90,000, signaling short-position profit-taking.
Despite the selloff, global funding rates remained positive, indicating that leveraged traders continue to maintain a bullish bias. In addition, zcash saw a 2.5% decline in open interest paired with a 1.5% price increase, suggesting traders holding short positions since the Jan. 8 governance dispute are reducing bearish exposure.
Altcoin Highlights
Monero led losses among major altcoins, falling 13.6% and extending its decline to 37.25% from its Jan. 14 record high.
Ether dropped 4.5%, underperforming Solana and XRP, which were down roughly 1.25% each. Cardano remained relatively resilient, losing just 0.85%.
Axie Infinity bucked the broader trend, surging over 16% on $2.1 billion in daily volume to reach its highest level since September. AXS is now up 165% since Jan. 13, highlighting strength among metaverse-focused tokens.
The CoinDesk Metaverse Select Index (MTVS) has been the strongest-performing benchmark this year, rising 43.9% year-to-date, while DeFi and memecoin indices have fallen 4.2% and 3.6%, respectively.
Meanwhile, WLFI, the DeFi token linked to President Trump’s family, gained 6.6% since midnight UTC, boosted by activity around its USD1 stablecoin, which has grown in circulation from $2.7 billion to $3.4 billion since Dec. 24.
CoinMarketCap’s “altcoin season” index remains low at 26/100, reflecting a bearish backdrop for altcoins relative to bitcoin. However, several tokens have entered oversold territory, raising the possibility of a short-term relief rally later this week.
