Bitcoin recovered to approximately $78,300 on Wednesday after briefly dropping to $75,600, marking a gain of around 1.3% since midnight UTC as markets reacted to the Democratic Party’s strong performance in the U.S. midterm elections. Ether (ETH) advanced roughly 2%, while the CoinDesk 80 Index gained 2.3%.

The rebound spread across the broader cryptocurrency market, with decentralized finance (DeFi) tokens leading the advance. The CoinDesk DeFi Select Index climbed 5%, driven partly by a 6.2% increase in Injective (INJ).

Bitcoin initially faced selling pressure as election results suggested Democrats could take control of Congress, creating uncertainty around the outlook for crypto legislation. However, sentiment improved after U.S. stock futures moved into positive territory. Investors are now turning their attention to Friday’s U.S. jobs report for additional signals about economic conditions.

Crypto Derivatives Signal Improving Buying Pressure

Activity across cryptocurrency derivatives markets picked up over the past 24 hours. Futures trading volume increased 27%, while open interest (OI) rose 3%. The combination suggests that trading activity was largely driven by adjustments to existing positions rather than a substantial inflow of fresh capital.

Liquidations climbed 22% to $469 million. At the same time, the taker buy-sell ratio turned positive, showing that buyers accounted for 51.6% of market orders compared with 48.4% for sellers. This marked a reversal from the previous day, when selling pressure exceeded buying activity by more than 51%.

Zcash (ZEC) attracted considerable speculative interest, with open interest jumping 25% as its price gained 14%. The increase suggests traders were establishing new positions during the rally. ZEC also recorded the strongest market-order buying pressure, while positive funding rates indicated that bullish traders were paying fees to maintain their leveraged long positions.

NEAR rose 7%, but its open interest increased by just 0.35%, suggesting that fresh derivatives positioning played a relatively small role in the price advance. Even so, the token recorded the second-strongest market-order buying activity and continued to post positive funding rates.

Bitcoin’s open interest advanced 1.6%, alongside a 2.1% price increase. Ether recorded a 4.2% rise in open interest as its price climbed 2.7%. Trading volumes for both cryptocurrencies expanded between 37% and 40%, with funding rates remaining positive.

Most major cryptocurrencies maintained slightly positive funding rates. Monero (XMR) and Bitcoin Cash (BCH), however, were among the exceptions, registering negative readings.

Open-interest-adjusted cumulative volume delta (CVD) indicators showed mixed trading conditions across the market. Chainlink (LINK) posted the strongest negative reading, while the aggressive selling observed during Bitcoin’s initial decline was partially offset as prices recovered.

Options activity also suggested that traders were becoming less concerned about an immediate downside move. Bitcoin’s one-week implied volatility fell 41% to 34%, while put-call skew, which had temporarily approached 19%, retreated toward its earlier levels, indicating reduced demand for downside protection.

Calls dominated Bitcoin’s most actively traded options, accounting for four of the six leading contracts. The December 25 $88,000 call and November 7 $78,000 call attracted particularly strong interest. Ether options displayed a contrasting trend, with put contracts representing four of its six most actively traded positions.

DeFi Tokens Outperform as Trump-Linked Cryptocurrencies Decline

Venice (VVV) emerged as one of the market’s strongest performers, rising 7% since midnight UTC and advancing 17% over the previous 24 hours to lead the CoinDesk 100 Index.

GRASS, BONK, NEAR and MORPHO each recorded gains of approximately 6%, while Zcash added 5% during the session and remained up 12% over the past 24 hours.

All seven cryptocurrencies included in the CoinDesk DeFi Select Index traded in positive territory. Injective and Ethena (ENA) were among the strongest performers in the group.

Memecoins also outperformed the broader cryptocurrency market. PEPE advanced 5%, while BONK gained 6%. Despite these individual gains, the CoinDesk Memecoin Index increased by a more modest 1.1%.

Cryptocurrencies linked to U.S. President Donald Trump experienced the opposite trend. The TRUMP token declined 7.1%, while World Liberty Financial’s WLFI dropped 5%. Trump Media shares also fell 6.5% in premarket trading.

Despite the market-wide rebound, sentiment indicators suggested that investors remained cautious. CoinMarketCap’s Fear and Greed Index stood at 37, keeping the market in the fear category. Meanwhile, its Altcoin Season Index reached 51, reflecting relatively balanced performance between Bitcoin and alternative cryptocurrencies.