Nvidia-led tech selloff weighs on crypto majors

Only five of the top 100 cryptocurrencies by market value are up 1% or more over the past 24 hours. That is the state of the market today.

These coins are ARB, RNDR, PEPE, QNT and GT. Most others, including market leaders Bitcoin, Ether, XRP and Solana (SOL), are in the red, while a handful are flat to positive.

This largely risk-off tone can be explained by the prospects of a deeper selloff in tech stocks. NVDA, the AI bellwether and the largest stock by market value, is already down more than 4% in pre-market trading. The reason: On Sunday, CEO Jensen Huang’s accepted having an affair with a suspected Chinese spy, and the company opening an investigation into the matter.

Derivatives positioning

• Positions closed: Crypto futures trading volume has surged over 200% to $180 billion in 24 hours, recovering from the weekend lull. Meanwhile, open interest (OI) has dropped by 3% to about $127 billion. It shows that traders closed positions and money left the market. Liquidations jumped to $1.1 billion. The taker buy-sell volume ratio, which tracks market orders, leans to selling at 51.5%.
• BTC funding still leans bullish: BTC (Bitcoin) open interest fell 0.2% against a 2.2% price drop, a sign of capital inflows amid the price dip. Liquidations were $305 million. Funding is positive but lower than Thursday, which means longs still pay shorts, though less than before.
• Ether funding flips: ETH open interest fell 6.7% against a 5.9% price drop, so money left. Its liquidations were $498 million, larger than BTC’s even though its open interest is half the size. Funding has flipped to negative from positive on Thursday, which means shorts pay longs.
• Capital outflows from top altcoins: Privacy coin ZEC’s futures open interest fell 9.7% against a 4.5% price drop, and XRP (the XRP Ledger’s token) fell 9.2% against a 6.5% drop. A bigger drop in OI relative to price implies capital outflows from the market.
• Volume spike in NVDA perps: Trading volume in Binance-listed NVDA perpetuals surged by over 200% to over $500 million after the company’s CEO Jensen Huang admitted to having an affair with a suspected Chinese spy. The company has opened an investigation into the same.
• Volatility returns: Bitcoin’s one-week implied volatility, the price swings options traders expect, jumped to about 43% from about 33% on Thursday. Ether’s rose to about 60% from about 46%. One-week skew, the extra premium paid for puts over calls, is back to about 13% for bitcoin from about 2%. Ether’s is about 15% from about 7%. Demand for downside protection has returned after the drop.
• Puts lead: Four of bitcoin’s six most active options contracts are puts at strikes $70,000 to $72,000. Ether is split three and three, with its most active contract a December put at $1,900.

Token talk

• Ether fell 5.9% to $2,100 after closing Sunday below its 200-day moving average for the first time since Aug. 18. It made up about $501 million of the $1.16 billion in crypto liquidations in the last 24 hours, mostly longs. 
• XRP was among the worst performers among the top altcoins, losing 7.3% of its value over the same period amid a broader cryptocurrency market drawdown.
• Sector-wise, payments-focused cryptocurrencies are seeing the brunt of the drawdown, losing more than 5% as a category, compared to 3.5% for decentralized finance tokens, 2.35% for memecoins and just 0.12% for layer-two tokens.
• Arbitrum is in fact bucking the sell-off, rising more than 5% in the last 24.hour period as onchain activity surrounding real world assets keep growing.