Crypto traders are in risk-on mode as bitcoin dominance nears return to 60%

Bitcoin Dominance

Bitcoin's market dominance, its share of the total cryptocurrency market capitalization, is nearing the 60% mark. This metric is a key indicator of investor sentiment, as a rising dominance often suggests that capital is flowing primarily into Bitcoin, sometimes at the expense of altcoins. Concurrently, the share held by USDT, the largest dollar-pegged stablecoin, has slipped to approximately 6.3%. This decline in stablecoin holdings implies that traders are actively converting their cash equivalents into cryptocurrencies, further reinforcing the 'risk-on' narrative.

The interplay between Bitcoin's dominance and stablecoin share provides a clear signal of market appetite for risk. When investors move out of stablecoins and into volatile assets like Bitcoin, it reflects a greater willingness to take on risk in pursuit of higher returns. This trend suggests a potential shift in market dynamics, where Bitcoin could lead a broader market recovery or consolidation, drawing liquidity from less favored assets or from the sidelines.

Oliver Carding

Oliver Carding, head of marketing at Tesseract Group, a firm managing $500 million in assets, highlights the critical role of macroeconomic data in shaping Bitcoin's price action. He specifically monitors Friday's nonfarm payrolls report and the October 14 Consumer Price Index (CPI) for their impact on longer-dated Treasury yields. Carding uses a 10-year real yield of about 3% as a crucial monitoring level, suggesting that a sustained move above this threshold would make a retest of the $80,000 to $82,000 range for Bitcoin more probable than a push towards $90,000.

This perspective underscores the sensitivity of risk assets like Bitcoin to traditional financial market indicators. Lower odds of an interest rate hike, which have recently fallen from 70% to 30% after dovish remarks from Federal Reserve officials, tend to support cryptocurrencies. However, a stronger-than-forecast jobs report could revive rate hike bets, potentially increasing Treasury yields and putting downward pressure on Bitcoin, illustrating the delicate balance between crypto market sentiment and broader economic signals.

Derivatives Positioning

Derivatives market data further corroborates the 'risk-on' sentiment, albeit with a cautionary note regarding volatility. Bitcoin's open interest (OI) picked up significantly, rising to $22.4 billion from $20.9 billion the previous day. This increase, coupled with spiking funding rates on platforms like Hyperliquid and OKX (running 9-10% annualized), indicates that traders are actively adding leveraged bullish positions. The 3-month annualized basis on Deribit also held steady above 6%, reinforcing the bullish bias in futures markets.

Options flow remained heavily call-skewed, with the 24-hour put/call ratio at 88% in favor of calls, up from 83%. While these metrics point to strong bullish conviction, the market is not without its risks. Coinglass data revealed $344 million in 24-hour liquidations, a substantial increase from $100 million the prior day, with a 28-72 split between longs and shorts. This high liquidation volume, particularly for long positions, highlights the inherent volatility and the potential for sharp price reversals, with $87,400 identified as a core liquidation level to monitor on Binance.