Cryptocurrency markets have been falling ever since Bitcoin (BTC) hit $69,000. After the altcoins fell due to dominance while the price was rising, it loosened to the bottom supports with the fall of Bitcoin. Bitcoin has now slackened to $39,700 levels. So he saw a net loss of $30,000.

Perhaps due to the impending Fed tightening, a significant portion of investors seem to have lost their enthusiasm. This sentiment is supported by some market data showing that market activity has dropped, which could lead to larger losses.

Bitcoin Funds Rates and Price

Rates from several major exchanges compiled by analytics firm CryptoQuant show that the cost of borrowing to buy crypto with leverage has dropped to the negative point. This means that the demand for money to open leveraged positions takes a hit.

btc funding rates

Open Interest on Bitcoin Futures

Open interest (OI) on Bitcoin futures has dropped slightly since the last week of December. It's currently $16 billion, slightly less than $19 billion at Christmas time, according to Skewcom. At the time of Bitcoin's November peak, open interest was roughly $26 billion.

btc futures aggregated open interest

Ethereum Futures

ETH futures open interest has continued to decline since its own November peak of $13 billion, according to data also provided by Skew. Open interest for the Ethereum futures market is currently around $8 billion.

eth figures aggretated open interest

Bitcoin and Ethereum Options Open Position

The OI for Bitcoin options is currently $7 billion and for ETH $5 billion. In December, those figures were around $10 billion and $7 billion, respectively.

total btc options open interest

A similar outlook exists for Ethereum.

total eth options open interest

Implied Volatility on Bitcoin Is Decreasing Rapidly

Implied volumes, calculated from option premiums and measuring the market's view of future risk, fell to levels not seen since October 2020. Sure, regular levels in crypto implied volatility would signal alarm and panic in the equity market, but since then, in the second week of December, the crypto's implied volumes have plummeted. This decline has accelerated in the last few days. One month implied volumes are currently at 60%; They had been hovering in the 80% range since the summer. When the demand for options falls, the implied volatility falls with it.

btc atm implied volatility

Ethereum's Implied Vols Drop

We share Implied Vols charts for Bitcoin and Ethereum. So what does Implied Vols mean? Briefly, this data shows the volatility estimate of the market from the option price. It gives advance notice in terms of risk. Now at 69%, implied volatility in one-month cash options in ETH has been at 100% since June. It's been more than a year since they regularly dropped below 70%.

eth atm implied volatility

Of course, that doesn't mean quiet markets can last forever, but it shouldn't be too surprising if prices turn downwards in the coming days or weeks. Although the technical data points to a possible decline, it could start a big reversal from here. For this very reason, you should not be angry with those who talk about the possibility of a decline, but with the data that creates this possibility.