Crypto Markets Hold Steady as Derivatives Flash Warning: Long Positions Unwind Amid Market Uncertainty

Crypto markets defied volatility fears Tuesday, holding ground while derivatives traders scrambled to reduce exposure. Spot prices showed remarkable resilience even as futures and options markets signaled growing caution among institutional players.

The Unwinding Game

Derivatives data reveals professional traders dumping long positions at the fastest pace in months. Open interest declines across major exchanges suggest leveraged players are taking risk off the table—classic behavior when uncertainty spikes. Funding rates normalize while put/call ratios tilt bearish, creating a curious divergence from spot market stability.

Steady Hands Prevail

Spot markets tell a different story entirely. Bitcoin holds above critical support levels while altcoins show mixed but generally stable performance. Retail accumulation patterns continue uninterrupted, suggesting the derivatives panic hasn't infected the broader market psyche—yet.

When the quants start running for exits while grandma HODLs undisturbed, you've either got a buying opportunity or the calm before the storm. In crypto, it's usually both—just ask anyone who's ever trusted a banker's 'stablecoin' promises.

Derivatives Positioning

• BTC's retest of $115,000 overnight saw cumulative open interest in USDT perpetual futures listed on Deribit, Binance, OKX, Bybit and Hyperliquid drop 222,000 BTC to 214,000 BTC, the lowest in over a week.
• The capital outflow suggests the price drop was driven by the unwinding of long positions rather than the initiation of new short positions.
• The opposite was the case with ETH. Open interest rose to above 5 million ETH, suggesting an influx of new shorts.
• Open interest in the top 10 tokens, excluding ETH and BNB, fell over the past 24 hours.
• Mantle Network's MNT token has gained nearly 14% in 24 hours. However, funding rates have flipped bearish in the last few hours alongside an uptick in open interest. Those holding long positions are now shorting futures to hedge their bullish exposure.
• On the CME, positioning in BTC standard futures sized at 5 BTC remains light with annualized three-month basis locked below 10%. ETH's open interest has risen to 1.83 million, reversing the majority of a decline that took it to 1.51 million ETH, indicating renewed capital inflows. The basis, however, dropped to 8.90% from 11%.
• Open interest in ETH CME options surpassed 200,000 ETH for the first time since September, indicating increased investor interest in hedging instruments.
• On Deribit, BTC puts out to November expiry trade at a premium to calls, reflecting concerns the price will drop. Subsequent expiries show neutral-to-bullish sentiment. In ETH's case, the bearish sentiment is seen out to September expiries.
• Block flows via OTC network Paradigm featured long positions in the BTC $120K put expiring Aug. 22 and the ETH $4K put expiring Aug. 29.
  

Token Talk

• Starknet's v0.14.0 upgrade introduces a multi-sequencer setup with Tendermint consensus, the first step toward decentralizing sequencing and proving. Multiple sequencers will now participate in block generation, aiming to boost resilience and throughput.
• The release includes a pre-confirmation system for near-instant transaction updates and an EIP-1559-inspired fee model with a minimum charge of 3 gFRI. A brief 15-minute mainnet outage is expected during rollout.
• Starknet plans to expand sequencer and prover decentralization in later versions, with the long-term goal of a fully distributed scaling system.
• The shift may also have implications for Starknet’s STRK token, which is used for transaction fees and staking. With the introduction of a base fee burn and a more competitive fee market, traders can expect long-term supply compression similar to Ethereum’s post-EIP-1559 dynamics, which has burned over 5 million ETH to date.
• Solana's DeFi TVL rose 30.4% in the second quarter to $8.6 billion, driven mainly by Kamino’s $2 billion contribution, cementing its spot as the second-largest network by DeFi activity, Messari data shows.
• Spot DEX volumes fell 45% to $2.5 billion as memecoin hype faded, while stablecoin supply dropped 17% to $10.3 billion. USDC’s Solana market share slid to 69% with a $7.2 billion cap, while USDT held steady near $2.3 billion.
• Liquid staking participation grew to 12.2% of SOL’s supply, lifting staked value to $60 billion and enhancing DeFi yields. Solana’s circulating market cap climbed 30% to $82.8 billion, ranking sixth among all tokens.