Crypto markets tumbled toward April lows on Friday as a lingering liquidity crunch amplified volatility. Bitcoin (BTC $87,058.50) and Ether (ETH $2,934.13) each dropped roughly 10% over 24 hours, with BTC trading near $82,200 and ETH approaching $2,700.
Altcoins fared worse, with some tokens falling as much as 20%. The CoinDesk 20 Index (CD20) declined 10%, while the CoinDesk 80 Index lost 12%, leaving all constituents in negative territory.
Liquidity Pressure
The sell-off follows a liquidity squeeze that began during October’s market-wide liquidation event. CoinDesk Research notes that liquidity remains thin, leaving prices vulnerable to sharp swings. U.S. equities also declined, with the Nasdaq 100 now 9.4% below its October 31 record high.
Derivatives Activity
- Bitcoin’s 30-day implied volatility (BVIV) surged above 64%, while Ether’s volatility index jumped to 87%, the highest since April 10.
- Open interest (OI) in BTC fell to 700K BTC from 752K BTC, reflecting the unwinding of leveraged bullish positions. Analysts noted some traders are “catching the falling knife” by buying futures amid the decline.
- OI across altcoins also dropped, with DOGE, ENA, and ASTER falling more than 15%.
- On Deribit, BTC and ETH options show a strong bias toward puts, with 46% of BTC block flow accounted for by put spreads. ETH flows mirrored this trend. Some traders even purchased deep out-of-the-money IBIT puts at the $15 strike.
Market Sentiment and Altcoins
The altcoin market saw severe declines, with many tokens hitting multimonth lows. The Crypto Fear & Greed Index sank to 11/100, its lowest since June 2023.
Bitcoin and Ether were not immune, each falling roughly 10%, though the average crypto RSI is in oversold territory, suggesting a potential relief rally.
Despite the market turmoil, some traders profited. Two traders earned a combined $1.3 million by sniping Jesse Pollak’s creator coin, JESSE, purchasing tokens in the same block as their deployment, according to Arkham Intelligence.
