Crypto Markets Struggle as Bitcoin Retraces Gains and Altcoins Slide Further

Crypto markets failed to recover on Tuesday, with Bitcoin retracing last week’s gains and altcoins extending losses amid persistent investor caution.

Bitcoin hovered around $87,000, down from last week’s high of $92,350, as the broader market remained weak despite hopes for a traditional “Santa rally” in December. The cryptocurrency market continues to linger in “extreme fear” territory after Monday’s sell-off, which appears to have dented investor confidence.

Altcoins mirrored Bitcoin’s struggles, with several tokens losing more than 5% over the past 24 hours, led by privacy-focused coins. Overall, Bitcoin has retraced nearly the entire Nov. 21–28 rally, underperforming U.S. equities during the same period; the Nasdaq Composite Index climbed 6.6%.

Capital outflows from major token futures continued, particularly for BTC, ETH, XRP, and SOL. Open interest in futures tied to these cryptocurrencies dropped by up to 6% over the past 24 hours, reflecting cautious investor sentiment following the October 8 crash and auto-deleveraging-driven losses.

The 90-day annualized basis for Bitcoin—the gap between futures and spot prices—has fallen to cycle lows of roughly 4–5%, with Ether’s basis approaching 3–4%. Meanwhile, Bitcoin’s 30-day implied volatility index (BVIV) is rising relative to Wall Street’s VIX, signaling heightened market uncertainty. The volatility spread between ETH and BTC has narrowed to 21.50, the tightest since May 8, indicating expectations of continued turbulence in Bitcoin.

Options activity on Deribit shows sustained put skew for BTC and ETH, while block trades reveal a preference for put spreads and calendar call diagonal spreads in Bitcoin, and risk reversals and put spreads in Ether.

Among altcoins, Ether and XRP each fell by around 0.6% over 24 hours, underperforming Bitcoin, which posted a modest 0.75% gain. Privacy coins were hit hardest: Zcash (ZEC) dropped 8%, marking a 33% decline over the past week, while Monero (XMR) and Dash (DASH) lost between 5–6%. This suggests that the privacy coin boom may have been short-lived rather than indicative of a sustained shift in trader behavior.

CoinMarketCap’s “altcoin season” indicator remains stagnant at 24/100, reflecting continued investor preference for Bitcoin and a select group of DeFi tokens capable of generating yield even in a declining market.

Among these DeFi tokens, SKY (formerly MKR) rose 6.7% on Tuesday following announcements of token buybacks. Increased interest in its associated stablecoin, USDS (formerly DAI), also contributed to the rally. USDS has grown from a $7.6 billion to $9.5 billion market cap over two months and currently offers investors a 4.5% yield through staking.