Crypto markets were steady on Wednesday as traders absorbed a protocol exploit while waiting for a U.S. inflation report that often sets the tone for risk assets.
Harmony, a layer-1 blockchain network for DeFi protocols and marketplaces. confirmed it had been hit by an exploit early in the Asian day. An attacker minted some 4 billion ONE tokens through empty blocks, representing about 26% of the token’s circulating supply.
Around 2.8 billion of the tokens were quickly funneled to exchanges, pushing ONE down as much as 40% to a record low.
Broader markets were also little changed before the July U.S. CPI print, due at 12:30 UTC. Brent crude is near $90 a barrel after more Houthi attacks on shipping in the Bab el-Mandeb Strait and a U.S. strike on a vessel in the Gulf of Oman renewed supply concerns overnight.
Bitcoin absorbed all of this quietly, adding 0.23% since midnight UTC to around $63,900. The Fear and Greed index is at 38.
Derivatives positioning
- Futures market stasis masks a bearish shift in taker sentiment: While the aggregate crypto futures market appears to be in stasis, with negligible changes in total volume and open interest, underlying positioning is shifting. The long-short ratio for takers, or those executing market orders that remove liquidity from the book, has flipped bearish, with shorts now accounting for 51.36% of activity. This is a 180-degree reversal from the bullish bias observed earlier in the week.
- Avalanche shows signs of aggressive shorting as open interest climbs: The AVAX token has emerged as one of the largest laggards among the top 100 coins over the past 24 hours, even as open interest (OI) grew 6%. A combination of falling prices and rising OI validates the current weakness in the spot price. Confirming this trend is the 24-hour cumulative volume delta (CVD), which is the most negative among major assets, suggesting that bears are aggressively shorting via market orders rather than utilizing passive limit orders.
- Dogecoin leverage builds toward a potential volatility breakout: Open interest in DOGE futures continues to climb, surpassing 17.2 billion tokens, the most since October. This significant growth from the June low of 12 billion tokens occurred while the price remained pinned near the 7-cent mark. The buildup of leverage amid sideways price action suggests that the market may be coiled for a significant volatility event in the near term.
- Major assets see light positioning: Market participation in the two largest cryptocurrencies remains subdued, with bitcoin’s open interest hovering below 750,000 BTC. This lack of momentum has persisted for several weeks, and a similar trend is visible in ether , indicating that institutional and retail traders alike are currently sidelined in the majors.
- Selling pressure dominates the altcoin market according to CVD trends: Most of the 25 largest cryptocurrencies are exhibiting negative 24-hour cumulative volume deltas. This widespread selling pressure indicates a general bearish tilt across the sector, with Chainlink , Cronos , and Tron being the only notable exceptions.
- Implied volatility remains depressed ahead of key U.S. inflation data: Bitcoin’s 30-day implied volatility index, BVIV, is back under pressure, receding to 37.5% from Monday’s high of 38.66%. Short-dated one-week implied volatilities also remain at low levels, signaling that options traders are not anticipating significant changes following the U.S. CPI release. This suggests the market may be underpricing the actual event risk.
- Options traders eye the $70,000 level while hedging for volatility: In the Deribit bitcoin options market, the $70,000 call remains the most actively traded contract for the second consecutive day. Simultaneously, there is a growing preference for BTC strangles, a strategy involving the simultaneous purchase of puts and calls, indicating that some participants are positioning to profit from a sharp move in either direction.
Token talk
- CRV is the week’s standout performer, up roughly 35% over seven days and trading around 28 cents. The move coincides with a 15% annual emissions reduction that is set to trigger imminently. It has risen by more than 3% since midnight UTC.
- Uniswap (UNI) has tumbled by more than 10% over the past 24 hours with no clear catalyst for the slide, suggesting the altcoin market remains vulnerable to price swings due to limited liquidity and market depth.
- Monero (XMR) is up by 5.8% since midnight and has now retraced Tuesday’s entire shift to the downside.
- AI tokens NEAR, FET and TAO are all also in the black, up by between 1.3% and 2.3% respectively as AI-themed optimism slowly returns to the market after months of waning sentiment.