While the smallest dinosaur coins resist profit-taking, Bitcoin seeks to find balance

The crypto market witnessed a distinct split on Thursday. As Bitcoin continues to consolidate above the $94,500 support level, there has been a sharp wave of selective selling in the altcoin market. The most notable phenomenon is that the smallest dinosaur coins launched before 2018 remained more resilient despite the pressure of profit-taking.

This split signals that the crypto market is maturing as a macro hedge. Wenny Cai, COO of SynFutures, noted that Bitcoin’s trading range between $90,000 and $100,000 has become a sophisticated hedge against central bank volatility during times of global economic uncertainty. This week, political tensions and internet shutdowns in Iran have reaffirmed the importance of decentralized assets like cryptocurrencies.

Dinosaur coins vs. new tokens: Why are long-term assets holding on?

Bitcoin Cash (BCH), Dash (DASH) and Tezos (XTZ), which are among the smallest dinosaur coins, showed a noticeable superiority on Thursday. BCH has maintained its ongoing upward trend since April 2024, marking a daily increase at $552.60. XTZ, on the other hand, held above $0.51 with a 47% increase in trading volume of $44 million. Ethereum (ETH) has positioned itself at $2.81K, supporting this group’s resilience.

In contrast, memecoins like Pepe (PEPE) and BONK experienced intense selling pressure during profit-taking. PEPE has lost 6.11% in the last 24 hours, while BONK has dropped by 7.60%. Newer derivatives platform tokens like Lighter (LIT) were hit even harder, falling 6.46%. This diotomy indicates that investors are shifting towards long-lasting assets as they reassess risk.

The CoinDesk 80 Index (altcoin-heavy) has seen a 1.2% decline since midnight, markedly outpacing the Bitcoin-weighted CoinDesk 20’s 0.4% decline. This opening highlighted the divergence of the liquidation of short-term speculative assets and the long-term hodl strategy.

Bitcoin’s macro role and the dynamics of the derivatives market

Bitcoin experienced rapid sell-offs in western markets overnight, recently positioning itself at $84.65K. This level formed Wednesday’s low of $85,200. In the U.S. stock market, the Nasdaq fell 1.5%, while Microsoft retreated more than 11% after fourth-quarter earnings.

In derivatives markets, a more nuanced picture emerged. The open interest of CME-listed Bitcoin futures has surged to 123,720 BTC, marking a four-week high. Exchanges liquidated $260 million in bearish positions within 24 hours, while turning $190 million into bullish bets. Total open interest (OI) in the crypto derivatives market has risen to $147.01 billion, reaching the highest level since November 11.

Strong demand for $100,000 call options on Deribit continues, with open interest surpassing $2 billion. Traders also hold long positions in $90,000 put options (expiry January 26) and finance them with $104,000 call sales. These options strategies reflect the market’s mixed signals about upside potential.

Selective capital allocation and the strength of the smallest dinosaur coins

Among the smallest dinosaur coins, Solana (SOL) and Ripple (XRP) showed mixed performance. SOL lost 7.17% of its value, while XRP fell 5.87%. However, these declines have been much more limited than the rapid erosion of memecoins. DOGE fell by 7.05%, while newly issued airdropped tokens suffered much heavier losses.

The example of Pudgy Penguins illustrates the new strategic direction of Web3. The NFT brand attracts mainstream users through retail channels and games, which then lead them to the PENGU token and Web3 ecosystem. More than $13 million in retail sales and more than 500 thousand game downloads demonstrate the way long-term brands can remain resilient.

Volatility in the US Treasury market fell to its lowest levels since October 2021. Bitcoin and Ethereum volatility has similarly decreased. This creates a favorable environment for risk assets, but the selective capital allocation further emphasizes the long-term consistency of the smallest dinosaur coins and the volatile nature of new tokens and memecoins.

In summary, the split observed in the crypto market on Thursday suggests something deeper than mere short-term profit-taking: investors are exiting speculative new products while preferring the proven network effects and stability of the smallest dinosaur coins. Coupled with Bitcoin’s growing prominence as a macro hedge, this trend suggests a reshaping of the long-term market structure.