Crypto majors bitcoin BTC$86,385.54, ether ETH$2,806.04, XRP$2.0677 and solana SOL$129.91 consolidated over the past 24 hours following a volatile week that saw the broader market fall to the lowest levels in months.

The market is still gripped by "extreme fear" with the Fear and Greed Index standing at 12/100, although it's worth noting that prolonged periods below 20/100 typically pave the way for a market bounce.

Altcoins continue to struggle with a lack of liquidity and lack of demand for speculative risk assets. The CoinDesk Memecoin Index (CDMEME) is down by 30% in the past month, underperforming CoinDesk 5 (CD5), which has lost 23%.

Bitcoin now faces a test in order to reverse the bear-market trend. A rejection anywhere up to $95,000 would indicate a fourth lower high, confirming a downtrend.

Derivatives positioning

• Volmex's BVIV, the 30-day options-based implied volatility index, has bounced back to nearly 60%, erasing an early decline to 57.55%.
• The rebound comes as the spot price faces renewed downside pressure, maintaining the inverse relationship seen through the recent market swoon.
• Rising demand for BTC puts on Deribit, coupled with declining trader interest in call overwriting, is responsible for the recent upswing in volatility indexes.
• Traders seem to be rolling long positions in puts to lower strike prices, as evident from the growing popularity of the $80,000 put, which now has over $2 billion in open interest.
• BTC and ETH call-put skews remain defensive or negative.
• Block flows over the past 24 hours have featured preference for strategies that benefit from a broad range play in spot prices, such as the BTC call condor.
• Put calendar spreads have dominated block flows in the past 24 hours.
• In the futures market, XRP, DOGE and HYPE have seen increases in open interest while BCH saw a 5% drop in open positions.

Token talk

By Oliver Knight

• The altcoin market showed weakness against bitcoin trading pairs over the past 24 hours as issues around a lack of liquidity persisted.
• Market depth, a measure of liquidity for particular trading pairs, remains low for tokens like TON$1.4881 and DOT$2.2807. At the time of writing, the 2% market depth on TON is between $500,00 and $800,000, which means it would take a trade of less than those figures to move the market by 2%.
• The depth is lower on DOT and even worse across several smaller altcoins, this means that when a market is volatile, moves become exaggerated due to positions forcibly closing amid liquidations or stop-loss triggers.
• CoinMarketCap's "Altcoin Season" indicator ticked down to 23/100 from last week's 30/100 to suggest that traders are opting to hold bitcoin or stablecoins as opposed to more speculative altcoin tokens.
• While sentiment remains fearful, from a technical perspective crypto tokens are in a "neutral" zone, exhibiting neither oversold nor overbought conditions.
• Where we go from here will depend on whether bitcoin BTC$86,385.54 can steer its way out of trouble with a move back into the $90,000 range, which would inspire confidence across the entire market.
• A drop back to last week's low of $81,000 could trigger another panicked sell-off, in which altcoins will fare worse due to their abject liquidity situation.