Bitcoin dropped around 2% as South Korea’s Kospi index plunged 11% and the U.S. Senate delayed progress on the Clarity Act, leaving traders focused on the Federal Reserve’s upcoming policy decision.
Bitcoin (BTC) was down 0.53% since the start of the UTC session after experiencing a roughly 2% decline during the overnight U.S. trading period.
Two key developments weighed on market confidence.
The first came from South Korea, where semiconductor stocks faced a major selloff, pushing the Kospi benchmark down 11%. The steep decline marked one of the index’s sharpest daily losses in recent years and added pressure to global risk assets.
The second source of uncertainty came from Washington, where the U.S. Senate postponed consideration of the Crypto Clarity Act. Instead, lawmakers prioritized a Russia sanctions bill and federal nominations, leaving the legislation in limbo with only two weeks remaining before the Aug. 8 summer recess. The possibility of the bill becoming law this year has now become far less certain.
Ethereum (ETH) also slipped 0.56% to $1,880 after failing to break above the important $2,000 resistance level on Monday. Market participants are closely monitoring both the Federal Reserve’s interest-rate decision on Wednesday and the Senate’s remaining legislative schedule as major catalysts for the week.
Traditional markets also showed weakness, with Nasdaq 100 futures declining 0.70%, gold falling 0.93%, and silver losing 1.50%.
Derivatives market points to cautious positioning
Futures sentiment turns bearish:
The futures taker long/short ratio shifted into negative territory, with short positions making up 51.5% of taker volume. This marks a reversal from the bullish positioning observed in recent sessions, indicating traders have become more defensive. Takers refer to participants executing trades at current market prices.
XRP futures activity increases:
XRP futures open interest climbed to 2.35 billion tokens, representing an increase of nearly 6% from the previous day. Meanwhile, Bitcoin, Ethereum, and Solana futures open interest remained largely unchanged, suggesting traders have not significantly increased exposure during the recovery from June lows.
Altcoin futures experience outflows:
Open interest tied to assets such as SHIB, AVAX, LINK, and DOGE declined, signaling reduced capital allocation toward several speculative altcoin positions.
CVD indicator flashes warning:
The 24-hour open interest-adjusted cumulative volume delta (CVD) for the top 25 cryptocurrencies turned negative for the first time in at least three weeks. The move suggests sellers are dominating market activity through aggressive market orders.
Funding rates weaken across major assets:
Bitcoin funding rates remain close to zero, indicating relatively balanced market positioning. However, funding rates for Ethereum, Solana, XRP, and TRX have turned negative, pointing to increasing demand for short positions.
Volatility remains muted:
Despite major events scheduled this week, including the Fed meeting and the core U.S. PCE inflation report, options markets are not signaling significant stress. Thirty-day implied volatility levels for Bitcoin and Ethereum remain near recent lows, suggesting traders are not pricing in extreme price swings.
Options traders favor downside protection:
Bitcoin and Ethereum put-call skews on Deribit have moved slightly higher, reflecting increased demand for downside protection following the recent spot market decline. Ethereum options show a smaller bearish bias compared with Bitcoin, although put options remain the most actively traded contracts for both assets.
Crypto token performance update
Lighter (LIT) emerged as one of the strongest performers, gaining 3.97% to $2.21 as it continued recovering from last week’s profit-taking. The token held the $2.10 support level for the third time this month.
MORPHO and Ethena (ENA) were among the few other cryptocurrencies trading higher, rising 1.54% and 1.46%, respectively. Both maintained relative strength within the DeFi sector despite weaker market conditions.
Fetch.ai (FET) recorded the largest 24-hour decline, falling 9.48%. NEAR, HYPE, and Worldcoin (WLD) also dropped between 8% and 9%, with AI-focused tokens and layer-1 networks bearing the brunt of the selloff.
PUMP declined 3.07% after Monday’s strong rally, though it remained above weekend levels as traders began locking in profits.
CoinMarketCap’s Altcoin Season Index stood at 53/100, slightly below Monday’s reading but still higher than levels seen during most of July.
