Bitcoin and the broader crypto market slipped lower as traders took profits following BTC’s move to a monthly peak, while escalating Middle East tensions added fresh selling pressure. Bears regained control across much of the digital asset market.

Bitcoin fell 1.1% and ether declined 1.7% since midnight UTC as the market shifted into a risk-off mode.

The decline followed bitcoin’s rally to $65,500 on Wednesday, its strongest level of the month, which encouraged some investors to secure gains after the recent advance.

Altcoins also gave back earlier gains. PUMP and ZEC each dropped 4.4% as Tuesday’s rallies faded, highlighting weak liquidity and limited momentum on both sides of the market.

U.S. stock markets also moved lower, with Nasdaq 100 futures slipping 0.25% and extending a broader decline that has lasted for about a month.

Geopolitical concerns remained a major market catalyst. Iran launched attacks on U.S. military facilities in neighboring Gulf nations on Thursday, while the U.S. continued airstrikes in the region, increasing uncertainty across global risk assets.

Derivatives Market Shows Reduced Risk Appetite

Ether’s decline slightly outpaced bitcoin’s, but the move appears to be driven mainly by traders closing bullish positions rather than a wave of new short selling.

Ether futures open interest dropped to 14.35 million ETH from Wednesday’s five-week high of 14.45 million ETH, suggesting investors were scaling back leveraged positions after the recent rally. Bitcoin futures showed similar behavior.

XRP open interest increased to a 10-day high of 2.21 billion XRP even as the spot price declined 0.6%. The rise in open positions could indicate increasing bearish exposure, although positive funding rates suggest some traders remain positioned for further gains.

XRP’s 24-hour cumulative volume delta (CVD) moved into negative territory, showing that short positions are being opened through market orders rather than passive limit orders.

SUI also recorded higher open interest, with positions rising 15%. However, total open interest of 654 million tokens remains within the range seen earlier in the week. The token itself dropped nearly 2% over the past day.

Overall, most cryptocurrencies excluding bitcoin, ether, and Monero posted negative open-interest-adjusted CVD readings, indicating that sellers are currently controlling market momentum.

Bitcoin’s 30-day implied volatility rose 2% to 38%. Historically, volatility levels below 40% have often preceded renewed market turbulence as prices revert toward longer-term averages.

In the options market, traders showed continued interest in bullish bitcoin bets. Deribit data showed increased volume and open interest in BTC calls at the $70,000 and $72,000 strike levels, likely tied to a large call spread targeting a move toward $72,000 by the end of July.

For ether, the most actively traded bullish option over the past 24 hours was a July-expiry call with a $2,300 strike price.

Altcoins Track Market Weakness

MORPHO was one of the few tokens to outperform on Thursday, rising 3.5% since midnight as it approached the $2.20 resistance level. The token previously failed to break through that level on July 2, triggering a decline toward $1.85.

Most other altcoins followed bitcoin and ether lower. HYPE, SOL, and ENA fell between 1.3% and 1.8%, while NEAR, JUP, and DASH posted larger declines.

CoinMarketCap’s Altcoin Season Index remained at 48 out of 100 after falling from 58 earlier in the week, as investors rotated attention back toward bitcoin.

Memecoins remained an active segment, particularly tokens launched on Robinhood’s blockchain network. Cashcat (CASHCAT) gained significant attention after rising from obscurity to a $220 million market capitalization during Robinhood Chain’s first week.

Since then, the token has fallen to around a $91 million market cap, though it continues to record approximately $60 million in daily trading volume.