Rewritten Version:

Bitcoin lost momentum after climbing to a two-week peak of $64,500, with fading open interest and limited spot demand raising questions over whether July’s 8.4% recovery can maintain its pace. The decline on Tuesday ended bitcoin’s longest daily winning streak since March.

Ether also moved lower, falling to around $1,770 after reaching $1,830 during Monday’s rally.

The recent July rebound has been largely attributed to a short-squeeze setup that developed in late June. At the time, bearish positions had accumulated heavily while bitcoin traded near its lowest levels of the year. As short sellers were forced to cover, BTC and other digital assets recovered from oversold conditions and extended gains throughout the first week of July.

The overall crypto market has gained 8.4% since July 1, pushing total market capitalization to approximately $2.16 trillion.

Meanwhile, risk sentiment weakened in traditional markets, with Nasdaq 100 futures declining 0.9% in early Tuesday trading as stocks continued retreating from June’s record highs.

Derivatives market update

Crypto derivatives markets saw more than $500 million in leveraged positions liquidated over the past 24 hours, with short trades making up most of the losses for the sixth consecutive session.

Despite bitcoin’s price recovery, futures open interest has declined to 740K BTC from a July 3 peak of 776K BTC. The decline indicates that derivatives traders are not significantly increasing exposure during the rally. Combined with weak spot demand, reflected through ETF flows and the Coinbase premium, the data has raised concerns about the recovery’s sustainability.

Ether is showing a similar pattern despite its recent outperformance against bitcoin.

Solana’s futures open interest has also dropped to 68 million tokens from more than 76 million on June 24, suggesting that its 10% price increase has not generated strong demand for leveraged positions.

Canton Network’s CC token declined more than 4% over 24 hours, while open interest increased 3% to 245.59 million tokens. Negative funding rates and weaker volume indicators point toward increasing bearish positioning.

Many cryptocurrencies are also recording negative open-interest-adjusted cumulative volume delta, suggesting traders are actively selling through market orders rather than placing passive bids, which may signal further downside pressure.

Volatility and options activity

Bitcoin’s 30-day implied volatility index (BVIV) climbed to 40%, ending a six-session decline. However, volatility remains significantly below January’s highs near 60%, which could still favor bullish market conditions. Ether’s volatility gauge has followed a similar path.

Options markets on Deribit continue to show uncertainty, with both call and put contracts appearing among the most actively traded positions over the past day.

Meanwhile, a large long call condor strategy on HYPE executed through decentralized exchange Derive suggests traders expect the token to remain range-bound between $75 and $80 until July 24.

Altcoin market trends

The altcoin sector continues to show mixed performance despite the broader market recovery. Tokens including FET, KASPA, and WLD have posted losses, while ETHFI and LIT have gained more than 30% over the past seven days.

WLFI was among Tuesday’s strongest performers, rising 4.8%, although the token remains down more than 89% from its launch price last August.

The divergence between altcoins highlights a maturing crypto market, where individual projects are increasingly influenced by their own fundamentals, adoption, and on-chain activity rather than moving together with the broader market.

The CoinMarketCap Altcoin Season Index currently stands at 46/100, below last week’s high but above May levels, when the reading remained near 30.