Bitcoin crosses critical support as fear spreads in the altcoin market

The largest cryptocurrencies continue to surpass heavy profit-taking demands, remaining above $87.77K amid intense trading activity. Currently, Bitcoin remains a core component of riskier asset portfolios, while the broader altcoin ecosystem faces mounting pressure.

The market has entered a phase of deep consolidation, where traders are balancing optimism about long-term adoption against short-term fears of price correction. The key support in the $90,000–$100,000 range has become a critical pivot point, not only for technical reasons but as a symbol of Bitcoin’s emerging role as a permissionless macro hedge against global uncertainty.

The Liquidation Wave Crossing the Derivatives Market

Bearish leveraged positions are a major driver of current market dynamics. The liquidation cascade has reached $260 million in bearish crypto positions within just 24 hours, while bullish liquidations have only hit $190 million—a clear signal that momentum is shifting toward the bull side.

However, the most interesting development is the continuous rise in open interest in crypto futures, which has hit $147.01 billion, the highest since November 11. This indicates that traders are not afraid to allocate capital to leveraged positions but are instead exploring new strategies. Among the top five tokens, BTC and SOL have seen significant increases in open interest, while XRP, DOGE, and ETH are experiencing capital outflows—indicating selective risk deployment rather than blanket market rotation.

CME and Deribit: Institutional Positioning Through Derivative Eyes

Bull call options crossing the $100,000 strike on Deribit continue to attract significant buying interest, with open interest surpassing $2 billion. These are not just speculative bets—the volume and positioning demonstrate serious institutional participation in the bull case.

At CME, BTC futures open interest has reached 123,720 BTC, the highest in four weeks, alongside net inflows into spot ETFs. This combination suggests renewed interest in cash-and-carry arbitrage strategies, where sophisticated investors exploit price differences between futures and spot markets.

Sophisticated traders on Deribit have set up long positions in $90,000 put options expiring on January 26, protected by $104,000 strike call sales. This is a classic risk management setup that covers various price scenarios—protecting downside while generating income.

The Memecoin Massacre and Altcoin Reality Check

The altcoin market is undergoing a painful reality check, with memecoins leading the decline. PEPE has fallen 5.61% in the past 24 hours, while BONK has halted at -4.75%, with losses extending since midnight UTC. This decline is not isolated—it reflects a larger trend where speculative appetite rises and falls rapidly.

Lighter derivatives exchange’s LIT token is another case study in the struggles of new token launches. Launched via airdrop on December 23, the token has lost 56% of its value and continues to decline by 4.40% in the past day. The pattern is clear: most new tokens in 2025 have lost over 70% of their value, a stark reminder that innovation in DeFi is not automatically guaranteed success.

The CoinDesk 80 index, heavily focused on altcoins, has fallen 1.2% since midnight, significantly underperforming compared to the CoinDesk 20 index led by Bitcoin, which has only dropped 0.4%. The relative weakness spans the entire altcoin ecosystem, from memecoins to new platforms.

Dinosaur Coins: Age Bringing Strength Amidst Weakness

Amid the altcoin bloodbath, legacy coins have shown unexpected resilience. DASH has only fallen 6.58% (compared to over 10% drops in others), BCH has risen 1.54% in the past day, and XTZ has only declined 5.10% despite overall market weakness. These are “dinosaur coins” that have survived multiple bull and bear cycles since 2018 or earlier.

XTZ stands out with vigorous volume activity—the daily trading volume increased by 47%, reaching $407.29K since midnight UTC. BCH’s bullish run extends its trend from April of last year, indicating that older infrastructure coins still hold particular appeal in the current market environment.

ETH remains in the green over the past 24 hours despite a 3.64% decline, while XRP has fallen 3.45%. This relative stability suggests that major blockchain platforms are less affected by speculative rotation, which damages memecoins and newer tokens.

Spot ETF Inflows and Institutional Appetite Recovery

New developments in US-listed spot XRP ETFs are crossing the broader trend of ETF adoption. Net inflows into XRP ETFs have reached $91.72 million this month, bucking the sustained outflows from Bitcoin ETFs. This signals that institutional money is diversifying across various tokens, not just concentrating in Bitcoin dominance.

The Pudgy Penguins ecosystem has emerged as one of the strongest NFT-native brands of this cycle, transitioning from “digital luxury goods” speculation to a multi-vertical consumer IP platform. Phygital product sales have reached $13 million with over 1 million units sold, while Pudgy Party game downloads have surpassed 500,000 in just two weeks. The ecosystem has distributed tokens to over 6 million wallets, demonstrating a significant user acquisition strategy.

Market Sentiment: Consolidation Precedes Clarity

The entire cryptocurrency market is in a transitional phase where political volatility and internet disruptions in certain regions reinforce the narrative of Bitcoin’s importance as a permissionless asset. The geopolitical backdrop adds urgency to macro hedge positioning.

Volatility in US Treasury markets has fallen to its lowest since October 2021, offering positive signals for risk assets in general. Bitcoin and Ethereum volatility follow this trend, indicating that overall market risk aversion is decreasing.

The key takeaway for the current market: Bitcoin has crossed critical support levels and remains there, institutions are actively repositioning through derivatives and spot ETFs, while the altcoin market is undergoing a painful cleansing period where weaker projects collapse. Dinosaur coins have survived the new volatility cycle due to their proven track record, while newer tokens struggle with execution risk. The market shows a clear bifurcation: Bitcoin as a macro hedge, legacy altcoins as cautious plays, and speculative tokens as high-risk bets crossing into significant loss territory.