Cryptocurrencies underperformed traditional markets on Wednesday as traders shifted defensive. While equities and gold saw gains, Bitcoin traded near the bottom of its range at $112,000, signaling hesitation and risk aversion rather than strength.
Despite posting a slight uptick, BTC failed to break upward momentum seen across stocks and commodities, suggesting that crypto investors are bracing for more downside.
Altcoins Take a Hit as “Altcoin Season” Index Drops Sharply
Altcoins vastly underperformed Bitcoin.
- FET led declines with a 6.2% drop on the day and a 43% weekly loss
- MYX dropped 10%
- CAKE slid 4%
- The altcoin season index plunged to 38/100, down from 67/100 just weeks ago
FET’s decline intensified after Ocean Protocol exited the ASI Alliance and allegedly moved large token holdings to Binance, igniting panic selling.
Bearish Derivatives Activity Signals Rising Caution
Derivatives data revealed mounting defensive positioning across exchanges:
- A whale wallet (0xc2a3) opened a $140 million 5x short on BTC via Hyperliquid
- BTC futures open interest on Binance jumped by $510 million during Asian hours
- A trader transferred $89 million in USDC to Binance, possibly to short
- Funding rates for BTC and ETH remained flat to negative, signaling weak bullish conviction
- Open interest in Bitcoin options hit a record 61,440 BTC, while CME futures volume stayed muted
On Deribit, short-term put skew increased, and OTC desk Paradigm reported a long position in the Oct 18 $108K BTC put, reflecting fear of more downside.
AI Tokens Under Pressure Amid IMF Bubble Warning
The sharp retreat in AI-linked tokens has intensified concerns. FET, once trading above $3.11 during peak AI hype in 2024, is now hovering near $0.31, its lowest level in two years.
The IMF warned that an AI bubble burst could echo the dotcom crash, adding further pressure to AI assets already experiencing steep retracements.
Ocean Protocol’s departure from the ASI Alliance and large token transfers to Binance accelerated the sell-off, erasing nearly all of FET’s bull market gains.
Key Takeaway
Crypto markets are struggling to keep pace with traditional safe havens. With Bitcoin stuck at $112K and altcoins sliding hard, sentiment has turned defensive. Rising short interest, muted funding rates, and institutional hedging point toward elevated caution. Until macro tensions ease and confidence returns, traders appear more focused on protection than upside.
Disclaimer
This article is for informational purposes only and should not be taken as financial advice. Always conduct your own research before making investment decisions.
