By Oliver Knight, Saksham Diwan

Bitcoin recovered after falling to $86,000, its lowest point in more than a month, on Sunday.

The rebound took place alongside the opening of bitcoin futures trading on the CME at 23:00 UTC. The largest cryptocurrency rose more than 2% in the subsequent nine hours before losing strength at $88,250.

Zooming out, bitcoin remains in a grueling downtrend characterized by a series of lower highs and lower lows that started in October to create the etchings of an early bear-market reversal.

Sunday's selloff was spurred by continued risk-off sentiment from investors after a volatile week that saw U.S. President Donald Trump give several speeches in Davos related to Greenland, tariffs and geopolitical conflicts around the world.

READ: Ark Invest bought $21.5 million of crypto company shares as bitcoin fell under $90,000

That sentiment lifted precious metals gold and silver to record highs, diminishing bitcoin's reputation as a haven asset and cementing it as a risk asset that, for the most part, moves in tandem with U.S. equities.

Derivatives Positioning

By Saksham Diwan

• BTC futures open interest (OI) stabilized at $22.6 billion despite downside price volatility, signaling a pause in recent deleveraging.

• While funding rates have neutralized around 5% annualized across most exchanges, OKX has diverged with a -3.8% rate, reflecting localized hedging or bearish bets.

• In contrast, the 3-month annualized basis on Binance and Deribit edged up to just over 5%, suggesting that while speculative froth has reset, institutional appetite is beginning to firm up during this consolidation.

• BTC options signal high conviction with a 15% one-week 25-delta skew and 58% call dominance in 24-hour volume.

• The implied volatility (IV) term structure has shifted from contango to backwardation, with near-term rates higher than those further out.

• Front-end volatility spiked to 41.53% (Jan. 30) relative to the ~39% mid-curve dip before rising toward 47% in late 2026.

• This structure highlights a significant premium for near-term positioning as the market braces for immediate price action while maintaining a bullish long-term outlook.

• Coinglass data shows $744 million in 24 hour liquidations, with a 77-23 split between longs and shorts. ETH ($273 million), BTC ($207 million) and SOL ($63 million) were the leaders in terms of notional liquidations. The Binance liquidation heatmap indicates $88,370 as a core liquidation level to monitor, in case of a price drop.

Token talk

By Oliver Knight

• As bitcoin continues to show weakness, the altcoin market showed some resiliency overnight.

• Ether ETH $2,900.31 and xrp XRP $1.8979 both rose by 2.8% since midnight UTC while privacy coins zcash ZEC $352.25 and monero XMR $460.25 gained 6% and 3%, respectively.

• The top performing corner of the altcoin market was metaverse tokens, with axie infinity (AXS) rising by more than 23% while the CoinDesk Metaverse Select Index (MTVS) increased by 6.92% since midnight to add to a year-to-date rally of 34.4%.

• The bitcoin-dominant CoinDesk 20 (CD20) Index has now lost 0.52% since the turn of the year while the altcoin heavy CoinDesk 80 (CD80) is in the black having risen by 2.5%, demonstrating relative strength among altcoins.

• RIVER, the native token of its namesake's stablecoin protocol, has been the most prolific altcoin over the 30 days, rising by more than 2,100% after a further 34% move to the upside over the past 24 hours.

• The "altcoin season" indicator is currently at 28/100, still well below September's high of 76/100, but significantly higher than this time last month, when it read 16/100.

• A lack of liquidity and market depth since October's $19 billion liquidation cascade means altcoin moves have been more exaggerated in both directions, leading to a high number of liquidations during selloffs like on Sunday as well as dramatic recoveries as traders navigate thin order books.