The crypto market has been experiencing a significant downturn, with Bitcoin's value dropping by nearly 15% since Monday and Ether plunging more than 17%. The decline is attributed to a combination of factors, including capital rotation driven by artificial intelligence IPOs and macroeconomic pressure from the Federal Reserve rate hike expectations.
Derivatives data confirms that this selloff is structural rather than temporary. Bitcoin open interest has dropped by 15% to $17 billion, with funding rates flipping from positive to negative or flat across multiple venues. The options positioning has also turned unambiguously defensive, with the put-to-call volume ratio reaching a 50-50 split.
While there is cautious optimism heading into the weekend due to the average RSI dropping into oversold territory, it remains uncertain whether this will translate into a relief bounce or mark another step in a deeper decline. Ether's critical support level of $1,420 remains a key focus for investors, with a sustained hold above this level crucial to maintaining its post-2022 recovery structure.