Bitcoin fell roughly 2% as a sharp decline in South Korea’s Kospi index and delays surrounding the U.S. crypto Clarity Act weighed on investor sentiment ahead of Wednesday’s Federal Reserve decision.
Bitcoin (BTC) declined 0.53% since the beginning of the UTC session after losing nearly 2% during the overnight U.S. trading period.
The market faced pressure from two major developments.
The first was a major selloff in South Korean technology stocks. Weakness among chipmakers pushed the Kospi benchmark index down 11%, marking one of its steepest single-day declines in years and triggering broader risk aversion across global markets.
The second factor was uncertainty surrounding U.S. crypto regulation. The Senate postponed discussions on the Crypto Clarity Act as lawmakers shifted focus toward a Russia sanctions package and federal nominations. With the Aug. 8 summer recess approaching, the timeline for advancing the legislation has become increasingly uncertain.
Ethereum (ETH) also moved lower, declining 0.56% to $1,880 after failing to overcome the key $2,000 resistance level on Monday. Traders are now closely watching Wednesday’s Fed rate decision and the Senate’s remaining legislative agenda for potential market catalysts.
Traditional financial markets also weakened, with Nasdaq 100 futures down 0.70%, gold declining 0.93%, and silver falling 1.50%.
Derivatives data shows rising caution
Futures traders turn defensive:
The futures taker long/short ratio shifted bearish, with short positions representing 51.5% of taker volume. This marks a reversal from the positive sentiment seen in previous sessions, suggesting traders are becoming more cautious. Takers are participants who execute trades immediately at available market prices.
XRP open interest climbs:
XRP futures open interest increased to 2.35 billion tokens, rising nearly 6% compared with the previous day. Meanwhile, open interest for Bitcoin, Ethereum, and Solana futures remained relatively stable, showing limited growth in market participation during the recent rebound from June lows.
Altcoin positions decline:
Futures activity for tokens such as SHIB, AVAX, LINK, and DOGE showed falling open interest, pointing to reduced exposure and possible capital outflows from some altcoin markets.
CVD indicator turns negative:
The 24-hour open interest-adjusted cumulative volume delta (CVD) for the top 25 cryptocurrencies moved into negative territory for the first time in at least three weeks. This indicates sellers are gaining control through market orders rather than relying on passive limit orders.
Funding rates signal bearish bias:
Bitcoin funding rates remain close to neutral, reflecting balanced positioning between longs and shorts. However, funding rates for Ethereum, Solana, XRP, and TRX have turned negative, suggesting growing demand for bearish trades.
Volatility stays subdued:
Despite major upcoming events, including the Federal Reserve meeting and the core U.S. PCE inflation report, options markets show limited signs of stress. Bitcoin and Ethereum’s 30-day implied volatility levels remain near recent lows, indicating traders are not expecting extreme market turbulence.
Options traders increase downside hedges:
Put-call skews for Bitcoin and Ethereum options on Deribit have risen slightly following the recent spot market decline. Ethereum options show a weaker downside bias compared with Bitcoin, although put options remain the dominant choice for traders seeking protection against further losses.
Token market overview
Lighter (LIT) was among the strongest-performing assets, rising 3.97% to $2.21 as it continued recovering after last week’s profit-taking. The token successfully defended the $2.10 support level for the third time this month.
MORPHO and Ethena (ENA) were also among the few gainers, advancing 1.54% and 1.46%, respectively. Both projects maintained strength within the DeFi sector despite broader market weakness.
Fetch.ai (FET) suffered the largest decline over the past 24 hours, dropping 9.48%. NEAR, HYPE, and Worldcoin (WLD) also fell between 8% and 9%, with AI-related tokens and layer-1 cryptocurrencies facing heavy selling pressure.
PUMP gave back 3.07% after Monday’s strong rally, although it remained above weekend levels as traders began taking profits.
CoinMarketCap’s Altcoin Season Index stood at 53 out of 100, slightly below Monday’s reading but still above the levels seen through much of July.
