Crypto Market Weathers Turbulent Weekend as Bitcoin and Ethereum Find Support

A Weekend of Heavy Selling Pressure

The cryptocurrency market faced significant headwinds over the weekend as investors experienced what traders describe as a “low liquidity sell-off” that sent major digital assets tumbling to levels not witnessed in nearly a year. Bitcoin, the world’s largest cryptocurrency, dropped to a concerning low of $74,674, while Ethereum plunged to $2,164 during the weekend chaos. These price points marked the lowest valuations these assets had seen since the spring and early summer months of the previous year, specifically between April and June. However, there was a silver lining to this turbulent period – both cryptocurrencies managed to find strong support at these critical levels, preventing further downside and allowing for a modest recovery. As of midnight UTC on Monday, both assets had climbed approximately 1% from their weekend lows, suggesting that buyers were starting to step back into the market and defend these important price levels.

The magnitude of the weekend selloff cannot be understated, as the broader cryptocurrency market witnessed a staggering $290 billion evaporation in total market capitalization from Saturday’s opening. This dramatic wealth destruction unfolded progressively throughout the weekend, with selling pressure intensifying as liquidity dried up and leveraged positions were forcibly closed. The situation painted a picture of a market under considerable stress, with investors rushing for the exits amid growing uncertainty about the near-term direction of digital assets. The timing of this selloff is particularly noteworthy, occurring during a period when traditional market participants were away from their desks, creating the perfect storm for exaggerated price movements in an already volatile asset class.

Broader Market Weakness Spreads to Traditional Assets

The cryptocurrency market’s struggles didn’t occur in isolation, as traditional financial markets also showed significant signs of stress heading into the new week. U.S. equity markets opened in negative territory during pre-market trading sessions, with futures contracts pointing to a difficult start for American investors. The S&P 500 index futures declined by 0.58%, while the technology-heavy Nasdaq 100 futures dropped by a more substantial 0.85%, reflecting the broader risk-off sentiment that had gripped global markets. This coordinated decline across risk assets suggested that investors were growing increasingly cautious about their exposure to volatile investments, preferring instead to move to safer havens or simply raise cash positions.

Interestingly, even precious metals, which had been experiencing a remarkable rally and hitting record highs just days earlier, couldn’t escape the selling pressure. Both gold and silver, traditionally viewed as safe-haven assets during times of market turmoil, lost approximately 3.5% of their value since midnight, demonstrating that this was truly a broad-based liquidation event rather than a simple rotation from one asset class to another. According to Derren Nathan, the head of equity research at Hargreaves Lansdown, the silver market experienced what he described as a bubble that “well and truly popped on Friday” after lending institutions increased their margin requirements for speculators. This forced selling added to the market’s anxiety. Nathan also pointed to another significant development that may have contributed to the risk-off mood: President Donald Trump’s nomination of Kevin Warsh for the position of Federal Reserve Chairman. Warsh is considered one of the more hawkish candidates who had been under consideration, meaning he’s likely to favor higher interest rates and tighter monetary policy – conditions that typically challenge higher-risk assets like cryptocurrencies and growth stocks.

Derivatives Market Shows Growing Caution

A closer examination of the cryptocurrency derivatives market reveals just how dramatically sentiment has shifted among professional traders and institutional participants. The total open interest across all cryptocurrency futures contracts has plummeted to $108.94 billion, marking the lowest level since April and representing a massive decline from the peak of $223 billion reached in October. This dramatic reduction in futures positioning indicates that traders are becoming increasingly averse to leveraged bets and are either closing existing positions or refraining from opening new ones. In the context of derivatives trading, open interest serves as a key indicator of market participation and conviction, so this decline signals a significant retreat from the market.

The bloodbath in leveraged positions was particularly severe, with exchanges forcibly closing over $800 million worth of leveraged bets within a 24-hour period. The vast majority of these liquidations were long positions – bets that prices would rise – highlighting how the rapid price decline caught bullish traders off guard. For Bitcoin specifically, futures open interest dropped by more than 1%, while Ethereum saw an even steeper decline of over 3%, suggesting that traders were particularly concerned about the second-largest cryptocurrency’s prospects. However, not all cryptocurrencies saw declining open interest; tokens like Solana (SOL), Dogecoin (DOGE), SUI, Cardano (ADA), and Chainlink (LINK) actually experienced increases in open interest, which analysts interpret as traders potentially opening short positions to profit from continued declines.

Meanwhile, certain cryptocurrency markets showed signs of buying pressure despite the overall negative sentiment. Zcash (ZEC), World Liberty Financial’s token (WLFI), Toncoin (TON), Bitcoin Cash (BCH), and Stellar (XLM) all registered positive cumulative volume delta (CVD) readings, which indicate that buyers were more aggressive than sellers in these particular markets. In contrast, the major cryptocurrencies including Bitcoin and Ethereum showed negative CVD readings, confirming the selling pressure these assets faced. On the Chicago Mercantile Exchange (CME), Bitcoin futures opened significantly lower at $77,730 on Monday, a substantial drop from Friday’s closing price of $84,105, directly reflecting the weekend’s spot market decline. Interestingly, traders note that markets often work to “fill the gap” created by weekend price movements, suggesting that Bitcoin could potentially bounce back above the $80,000 level in the coming days.

Options Market Reveals Trader Anxiety

The options market, which allows traders to bet on or hedge against future price movements, provides additional insight into current market sentiment and expectations. On Deribit, the largest cryptocurrency options exchange, there has been a notable shift in positioning. The $75,000 put option – a contract that profits if Bitcoin falls below that level – has become just as popular as the previously favored $100,000 call option. Additionally, put options at strike prices of $80,000 and $70,000 have seen significant accumulation of open interest, together painting a clear picture of traders’ fears about potential downside ahead. This defensive positioning represents a dramatic shift from the optimism that characterized the market just weeks earlier.

For Ethereum, traders have been actively purchasing put butterfly strategies, a more sophisticated options approach designed to profit from the asset trading within a specific price range rather than making a strong directional bet. This positioning suggests that traders are anticipating a period of consolidation following the recent sharp decline, rather than expecting either a strong recovery or continued steep losses. For Bitcoin, the dominant strategy has been put spreads, another defensive approach that limits both potential losses and gains while expressing a moderately bearish outlook. These options market dynamics reveal a market that has shifted from aggressive bullishness to cautious defensiveness, with traders more focused on protecting against downside risk than positioning for significant upside.

Altcoin Market Suffers Disproportionate Impact

The alternative cryptocurrency market, commonly referred to as “altcoins,” experienced even more severe punishment during the weekend selloff than the major cryptocurrencies. The risk-off sentiment combined with characteristically low weekend liquidity created a perfect storm that triggered a cascading wave of liquidations. Ethereum positions alone accounted for more than $300 million in forced liquidations over the 24-hour period, demonstrating the vulnerability of leveraged traders in thinner markets. Many smaller cryptocurrencies saw double-digit percentage losses that far exceeded the declines in Bitcoin and Ethereum.

Among the worst performers was privacy-focused cryptocurrency Dash, which lost a devastating 25% of its value over the course of the week. Native blockchain tokens for various layer-one and layer-two networks were also hit particularly hard, with Optimism (OP), SUI, Ethereum (ETH), and Tezos (XTZ) all declining by more than 20% over the same period. These dramatic losses highlight a harsh reality of cryptocurrency markets: when liquidity dries up and sentiment turns negative, smaller-cap assets typically experience exaggerated moves in both directions due to insufficient market depth and fewer participants willing to step in as buyers.

However, the altcoin market wasn’t uniformly negative, with some notable outliers bucking the trend. HyperLiquid’s HYPE token surged by more than 40% over the past week and gained 13% from Saturday’s low of $27.50, making it one of the strongest performers in the entire cryptocurrency market. The token’s rally came amid significant trading volume related to the frenetic precious metals markets, which some analysts suggested presented a new use case for cryptocurrency among traditional finance traders looking for exposure to commodity price movements. Jupiter’s JUP token also showed resilience, rising 7.9% since midnight UTC despite having fallen nearly 25% over the weekend. These isolated success stories demonstrate that even in challenging market conditions, specific narratives and use cases can drive demand for individual tokens. The extreme volatility in altcoin markets is largely attributed to their characteristically low liquidity, which market analysts assess by examining market depth – the availability of buy and sell orders at various price levels. When market depth is insufficient, larger orders or sudden shifts in sentiment can create exaggerated price movements because the demand for instant execution isn’t met with sufficient resting orders on the order book, leading to rapid price dislocations in both directions.