Bulls took a breather over the past 24 hours as risk-off sentiment swept through global markets, pushing bitcoin BTC$88,336.23 back toward $88,000.

Even though the Federal Reserve's decision to hold interest rates steady at 3.5%-3.75% was widely expected, growing geopolitical tensions and a rotation into safe-haven assets left crypto traders facing a sea of red.

Major stock indexes in the U.S. saw a mix of optimism and a retreat in response, with the S&P 500 briefly topping 7,000 for the first time before pulling back. Those indexes are being heavily influenced by earnings reports from the largest companies this week.

But in crypto, risk-off sentiment hit hard. Bitcoin slid, and the broader CoinDesk 20 (CD20) index lost 2.9%.

That exodus from crypto saw gold jump to record highs above $5,500 an ounce, dragging gold-backed tokens like XAUT$5,573.90 upward amid aggressive accumulation of the metal from Tether itself and central banks. Silver also extended gains to trade at $117 an ounce.

Bitcoin, and the wider crypto market, has kept on trading more like a liquidity-sensitive risk asset than a reliable hedge, given its deeper liquidity for investors looking to rotate out of the sector. The U.S. Dollar Index (DXY) fell to a four-year low this week, but investors aren’t seeing that decline as a structural shift.

Derivatives positioning

• Cumulative notional open interest in all crypto futures has dropped nearly 3% to $132.26 billion, indicating a growing aversion to risk.
• Crypto futures bets worth $348.30 million have been liquidated, marking a 13% increase in the tally over 24 hours. Most of these are bullish long plays.
• Despite the post-Fed decision drop in the prices of bitcoin and ether, their 30-day implied volatility indexes remain pinned near multimonth lows. That shows traders continue to expect overall calmer market conditions rather than panic.
• Open interest in futures tied to HYPE dropped over 12%, leading capital outflows from major tokens, including bitcoin, ether, solana and XRP.
• Annualized perpetual funding rates for the biggest cryptocurrencies are barely above zero now, unlike the 10% we saw early this week that signaled real bullish momentum. Funding rates for XLM have flipped decisively negative in a sign of trader bias for bearish, or short, bets.
• In the Deribit-listed options market, the mood remains cautious, with BTC and ETH puts remaining at a premium to calls. The put bias is relatively stronger in ether.
• Block flows (large trades executed outside of public order books), featured BTC call spreads and ETH put calendar spreads, both strategies aiming to profit from low volatility and theta (time) decay.

Token talk

• Optimism’s community approved a 12-month plan to buy back OP tokens using revenue generated by its network of Ethereum layer-2 chains.
• More than 84% of participating votes supported the measure, which passed quorum just ahead of its deadline. If a final vote by the protocol’s Joint House reaches a 60% majority, the Optimism Foundation will begin converting ETH earned from sequencer fees into OP starting in February
• Half of the Superchain’s revenue, estimated at over $17 million last year, would go toward monthly token purchases. The Superchain includes chains like Coinbase’s Base and World Chain.
• Some critics argued that pairing buybacks with token emissions canceled out any value returned to holders. The foundation pushed back, saying the buyback would help align the OP token with network growth while preserving funds for ecosystem development.
• OP's price is down 80% over the past year and now trades below 29 cents, having fallen an additional 5% in the last 24 hours.