Crypto Markets Experience Midweek Rally as Altcoins Shine
The cryptocurrency market has seen a notable boost this week, with Wednesday’s trading session marking a significant uptick in prices across the board. Major cryptocurrencies such as Bitcoin (BTC) and Ether (ETH) have risen by 2.9% and 3.1%, respectively. However, the spotlight is firmly on the altcoin market, where several tokens have surged in double-digit percentages as investors speculate on a potential new phase of the “altcoin season.”
Altcoins Steal the Show
The real excitement is centered around altcoins, with privacy-focused token Zcash (ZEC) leading the charge. ZEC hit a significant milestone, climbing to its highest point since May 2022. The token touched $97.25 before settling back to approximately $92.00, marking a remarkable 41% increase on the day. This surge was fueled by a 36% rise in daily trading volume, reaching $300 million.
ZEC isn’t alone in its upward trajectory. Decentralized Finance (DeFi) tokens like Ethena (ENA), Curve (CRV), and Raydium (RAY) have also posted impressive gains, each increasing by more than 8%. This altcoin rally comes at a time when the broader crypto market has been buoyed by external economic factors, including a U.S. government shutdown that has weakened the dollar and driven gold prices to record highs of $3,887.
The Macro Picture: Government Shutdown and Market Implications
The current market rally is occurring against a backdrop of significant economic uncertainty. The U.S. government shutdown has not only impacted traditional markets but has also played a pivotal role in the recent crypto surge. As the dollar weakens, investors are turning to alternative assets, including cryptocurrencies and gold, as a hedge against potential economic instability.
This shift in investor sentiment is further reflected in the derivatives market. BTC futures have shown a strengthening bullish bias, with open interest remaining high at approximately $31.69 billion. Binance continues to dominate the futures market with $13.19 billion in open interest. The 3-month annualized basis for BTC futures holds steady between 6% and 7%, indicating robust yield from basis trades. Traders are demonstrating confidence in the market, increasing their exposure with conviction and reinforcing the positive sentiment observed across the board.
Divergent Sentiments in BTC Options Market
While the futures market paints a picture of optimism, the BTC options market presents a more nuanced view. There’s a divergence in key metrics, reflecting a complex market sentiment. The 25 Delta Skew for short-term options remains low, indicating traders’ willingness to pay a premium for puts as a hedge against potential downside risks. However, the 24-hour Put/Call Volume ratio suggests a surge in bullish speculation, with calls making up 63.54% of the total volume—marking a significant shift from a previously put-dominated market.
This conflicting data underscores a highly polarized environment where traders are hedging against potential price drops, while a larger cohort bets on a short-term rally. Funding rates across major exchanges like Binance and OKX remain positive and have increased, signaling a strong demand for leveraged long positions. Deribit, in particular, is witnessing a significant premium, with its annualized funding rate soaring to 17%, indicating sustained demand for bullish positions.
Liquidations and Market Volatility
Despite the optimistic outlook, the market’s volatility is evident in the recent liquidation data. Coinglass reports $644 million in 24-hour liquidations, with a 38-62 split between longs and shorts. BTC, ETH, and other cryptocurrencies lead in notional liquidations, registering $166 million, $164 million, and $69 million, respectively. Binance’s liquidation heatmap highlights $116,650 as a critical liquidation level to monitor in the event of a continued price rise.
Aster: An Outlier Amidst Gains
While most altcoins bask in the glow of positive market performance, Aster (ASTER), the native token of the BNB Chain-based perpetual exchange, stands out as an exception. ASTER experienced a 6.8% slump on Wednesday, compounding a 25% decline over the past week. The fading hype around its HyperLiquid rival appears to be a contributing factor to its recent downturn, highlighting the inherent volatility and speculative nature of the crypto market.
Looking Ahead: A Time for Caution?
As the crypto market navigates this period of growth, it’s essential to recognize potential risks. The average crypto relative strength index (RSI) is approaching overbought territory, suggesting that a period of consolidation may be imminent. Investors should remain vigilant and consider the possibility of market cooling in the near term.
In conclusion, this week’s market rally is a testament to the dynamic and unpredictable nature of the cryptocurrency landscape. While altcoins are enjoying a moment in the sun, driven by broader economic factors and investor sentiment, the path forward is marked by uncertainty and potential volatility. As always, informed decision-making and cautious optimism remain key for navigating the ever-evolving crypto market.
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
