In the volatile world of cryptocurrencies, market fluctuations are nothing new, but when significant shifts occur, they capture the attention of traders and analysts alike. Early Thursday marked one such occasion as the crypto market experienced a notable downturn. Ether, the second-largest cryptocurrency by market capitalization, tumbled over 3%, dipping below the $4,000 mark—a move that triggered massive liquidations, including a substantial loss for a high-stakes investor.
Market Mayhem: A Broad Decline
Bitcoin (BTC) wasn’t immune to the chaos, slipping 1.5% to $115,600. This drop nearly wiped out the gains it had made during Wednesday’s rebound. Other major cryptocurrencies followed suit, with steep declines echoing across the market. Analysts suggest that these crypto market movements might be reflecting broader financial anxieties, particularly those tied to the increasing likelihood of a U.S. government shutdown. With Nasdaq and S&P 500 futures also in decline, Alex Kuptsikevich, chief market analyst at FXPro, emphasized the role of cryptocurrencies as early indicators of shifts in risk appetite.
Altcoins Under Pressure
Among the hardest hit in this market slide were altcoins like ASTR, AVAX, and PUMP, all of which suffered double-digit losses over 24 hours. The sudden downturn in AVAX was particularly pronounced, with open interest (OI) in its futures dropping by nearly 12%. Despite this, overall positioning in Bitcoin futures has remained robust, with OI close to record highs. In contrast, ETH futures OI has seen an uptick to 14.45 million ETH, even amid significant liquidations on decentralized exchange Hyperliquid.
Token Talk: HYPE Under Pressure
Hyperliquid’s HYPE token has been struggling to keep pace with the broader crypto market, largely due to mounting competition and looming token unlocks. The BNB Chain-based derivatives exchange Aster, backed by YZi Labs, has stirred the pot by surpassing Hyperliquid in daily perpetual trading volume. This unexpected shift has sent ripples through the on-chain trading ecosystem.
In a dramatic turn, Aster’s open interest skyrocketed by an unbelievable 33,500%, jumping from $3.7 million to a staggering $1.25 billion within just a week. Its 24-hour trading volume soared to $35.8 billion, eclipsing Hyperliquid’s $10 billion, according to DeFiLlama data. Aster’s total value locked (TVL) nearly tripled to $1.85 billion, while its token, ASTER, surged over 344% in the past week, boasting a fully diluted valuation of $15.9 billion. Meanwhile, HYPE has slid from $58.4 to $43, reflecting investor jitters over upcoming token unlocks slated for late November, when 237 million HYPE—worth more than $10 billion at current prices—will gradually become liquid over a two-year span.
Derivatives Dynamics
In the derivatives market, positioning continues to be a focal point. While AVAX experienced a sharp drop in open interest, the scenario was slightly different for other tokens. For instance, USDT- and dollar-denominated SOL perpetuals saw a slight increase in OI, rising from 29 million SOL to 30.28 million SOL as the spot price edged toward $200. This suggests some traders are shorting the decline.
However, XRP, SOL, HBAR, TRX, SUI, and XLM have all shown negative funding rates, indicating a bearish sentiment among traders who are leaning towards short positions. On the CME, a downward trend in BTC futures OI has resumed, while OI in ether futures has surged back to record highs above 2.2 million ETH. The annualized three-month basis for ETH has slipped from 9.8% to 7%, signaling a weakening bullish sentiment.
A Bearish Outlook?
On Deribit, both BTC and ETH put options continue to attract a premium over calls, underscoring a bearish outlook. Some market participants have opted for out-of-the-money lower strike ether puts through OTC desk Paradigm, further painting a cautious picture of future market movements.
As the crypto landscape remains tumultuous, traders and analysts alike are keeping a close watch on these fluctuations. While short-term volatility is a hallmark of the crypto market, understanding these underlying trends and shifts can provide valuable insights into broader economic patterns. As always, the key for investors lies in navigating these turbulent waters with a balanced perspective and a keen awareness of the dynamic forces at play.
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.
