With bitcoin stabilizing near a key support zone, traders rotated into altcoins on Wednesday, triggering sharp rebounds across a market still dominated by extreme fear.

Bitcoin (BTC) held above the critical $88,000 level, trading roughly flat compared to Tuesday, while pockets of the altcoin market saw outsized gains. STRK surged 28%, leading a group of speculative tokens that benefited as capital moved down the risk curve. Analysts warn that a decisive break below $88,000—especially in the current thin-liquidity environment—could drag the entire crypto market lower, including altcoins.

Despite the cautious backdrop, several tokens are staging relief rallies after a brutal stretch that erased roughly $400 billion in total crypto market value over the past week.

Derivatives positioning

• Futures open interest (OI) continues to decline across major assets such as BTC and ETH, reflecting persistent risk-off sentiment and ongoing capital outflows. Historically, confidence in derivatives markets takes time to rebuild.
• BCH and LINK are notable outliers, with OI rising more than 2% over the past 24 hours.
• Annualized funding rates for ZEC perpetuals remain deeply negative at around -50%, signaling strong short-side conviction following the token’s multi-hundred-percent rally since early September.
• Funding rates across most other large-cap tokens remain flat to slightly positive, suggesting a cautious but stabilizing outlook.

Options markets have turned decisively bearish. On Deribit, the $85,000 BTC put is now the most crowded position— a stark reversal from just weeks ago, when traders favored the $140,000 call. Demand for short-dated volatility remains elevated, with persistent appetite for BTC and ETH puts.

Block trading activity shows bitcoin traders concentrating on call diagonal calendars and strangles, while ether traders favored call spreads and straddles.

Token talk

• Mid-cap altcoins offered traders a rare bright spot, with AAVE, CRO, and INJ posting gains of 2%–6% over the past day.
• The bounce follows five consecutive days of heavy selling, which repeatedly pressured market sentiment.
• The CoinDesk 10 Index (ex-Bitcoin) is modestly positive over 24 hours but still down 19.5% on a monthly basis.
• The Fear & Greed Index remains stuck at “extreme fear” with a reading of 16/100, indicating sentiment may be stretched to the downside and susceptible to a continued rebound.
• Market direction hinges on bitcoin’s ability to reclaim higher levels—specifically a move back toward $98,000, which traders view as a threshold for resetting market structure.
• Ether is trading at $3,095 after gaining 1% against BTC.
• Bitcoin dominance slipped to 58% from 60% earlier this month, reflecting renewed risk appetite for altcoins as traders speculate on near-term volatility.

STRK stands out as the day’s top performer, posting a 28% rally. The move comes amid rapidly increasing deposits into its BTCFi initiative, which now holds more than 650 BTC ($72 million) and 900 million STRK—around 20% of the token’s supply—tightening available float on exchanges.