Risk-off crypto market: BTC retreats to $87K as altcoins extend losses
Crypto markets remain in a risk-off mood as bitcoin retraced nearly the entire Nov. 21–28 rally, trading around $87,000 after a high near $92,350. The Fear & Greed Index sits in “extreme fear.” Futures open interest for BTC, ETH, XRP and SOL fell 3%–6% in 24 hours; BTC’s 90‑day annualized futures basis dropped to cycle lows (~4%–5%) and ether’s basis neared 3%–4%. Option flows were biased toward puts and put spreads, and implied volatility dynamics show rising BVIV versus VIX and a narrowed ETH–BTC volatility spread. Altcoins underperformed: privacy coins led losses with ZEC down ~8% (33% week), XMR and DASH off 5%–6%. The altcoin season indicator remains weak (24/100). Exceptions included SKY (formerly MKR), up 6.7% after token buyback news and rising interest in its USDS stablecoin, whose market cap grew from $7.6B to $9.5B and offers ~4.5% staking yield. Key takeaways for traders: elevated uncertainty and deleveraging pressure are suppressing leverage and futures positioning, options skew favors downside protection, and selective DeFi yield stories (eg. SKY/USDS) may attract capital despite broad risk-off conditions.
Bearish
The article describes clear risk-off conditions: BTC has retraced a recent rally, futures open interest across major tokens is falling, futures basis is collapsing to cycle lows, and options flows favor puts and put spreads. These are classic signs of deleveraging and rising demand for downside protection, which typically exacerbate short-term downward pressure. Privacy coins’ large weekly declines and the stagnant altcoin-season indicator (24/100) suggest capital rotation back to BTC or yield-generating DeFi pockets rather than broad altcoin risk appetite. Historically, similar dynamics (declining OI, collapsing basis, put-skew dominance) have preceded extended consolidations or drawdowns as leveraged positions are unwound (eg. post-October auto-deleveraging event referenced). Short-term impact: heightened volatility, negative bias for altcoins and possible further BTC weakness as funding/futures stresses persist. Traders should favor reduced directional leverage, protect positions with hedges (puts, spreads), and look for selective opportunities in higher-yielding, news-driven assets (like SKY/USDS) rather than broad altcoin exposure. Long-term impact: unless macro or liquidity conditions improve, continued risk aversion can keep flows concentrated in top liquid assets and yield-bearing DeFi, delaying a broad market recovery but not necessarily impairing Bitcoin’s longer-term structural demand if macro tailwinds return.