Bitcoin steadied above a key support level on Wednesday, giving traders enough confidence to rotate into altcoins and sparking a series of sharp rebounds across a market still weighed down by extreme fear.
BTC traded just below $86,000 and remained virtually unchanged from the prior day. Meanwhile, select altcoins broke higher, with STRK jumping 28% to lead the move. Analysts caution that if bitcoin loses its $88,000 support—especially in the current thin-liquidity environment—the entire market, including outperforming tokens, could again come under pressure.
The modest recovery follows a punishing week in which nearly $400 billion in crypto market value was wiped out.
Derivatives positioning
Futures open interest tied to major assets like BTC and ETH continues to contract, signaling persistent risk-off sentiment and capital outflows. Historically, confidence in derivatives markets takes time to rebuild after large sell-offs.
BCH and LINK were among the few exceptions, with open interest rising more than 2% over the past 24 hours.
ZEC perpetuals continue to show extreme bearish skew, with annualized funding rates near -50%. This reflects aggressive short positioning as traders hedge against a pullback following ZEC’s multi-hundred-percent rally since early September. Across most other major assets, funding rates remain flat to slightly positive, indicating a cautious lean toward stability.
Options markets paint a similar picture. On Deribit, positioning has flipped decisively bearish, with the $85,000 BTC put now the most popular strike—replacing the previously dominant $140,000 call. Demand for short-dated puts remains elevated, keeping volatility firm.
Block traders in BTC gravitated toward call diagonal calendars and strangles, while ETH participants favored call spreads and straddles.
Token talk
Altcoins offered a rare bright spot on Wednesday. Tokens like AAVE, CRO, and INJ rose between 2% and 6%, breaking a five-day streak of heavy losses driven by relentless selling pressure.
The CoinDesk 10 Index, excluding bitcoin, edged slightly higher but is still down 19.5% over the past month. Sentiment remains at rock bottom, with the Fear & Greed Index holding at an “extreme fear” reading of 16/100—levels that often precede further short-term relief rallies.
Ultimately, the market’s direction hinges on bitcoin’s next move. A recovery toward $98,000 would help stabilize broader conditions and support continued altcoin rotation.
Ether traded at $3,095 after gaining 1% against bitcoin. BTC dominance slipped to 58% from 60% earlier in the month, suggesting increased appetite for selective altcoin exposure.
STRK remained Wednesday’s standout, rising 28% as deposits into its BTCFi initiative climbed above 650 BTC ($72 million) and 900 million STRK—around 20% of the token’s supply—tightening exchange liquidity and supporting price momentum.
