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Geopolitical tensions have impacted risk sentiment in crypto markets over the past week.
A reawakening of tariff tensions between Europe and the US, this time over the acquisition of Greenland – as well as what Treasury Secretary Scott Bessent referred to as a “six standard deviation” move in Japanese government bond (JGB) markets – has seen BTC fall from $97K to as low as $87K, while ETH fell from around $3,300 to around $2,800, but has recovered slightly for now back to the $3K psychological level at the time of writing.
The outsized shock in Japanese government bonds that coincided with a similarly extreme move in longer-dated US Treasuries has seen risk-on sentiment in US equities and crypto move lower.
However, the move in crypto has not been anywhere near as cataclysmic as sell-offs as recently as the Oct 10, 20256 liquidation cascade.
While major altcoins have underperformed BTC despite idiosyncratic catalysts, derivatives markets do not show marked increase in bearish positioning nor a meaningful pick-up in implied volatility.
One factor that partly explains why the selloff in BTC has so far been relatively contained is the massive decline in leverage in crypto markets post Oct 10, 2025.
Over the past 24 hours, open interest in perpetual futures contracts for BTC have declined close to $400M, but total open interest across the altcoins we track is still more than half of pre-Oct 10 levels.
Since that liquidation event more than three months ago, many retail traders have shown little appetite to take on leveraged positions anew, mitigating the impact of further liquidation-cascade driven selloffs.
Positioning in options markets so far reveals a lack of major panic beyond the immediate near term. Since the start of the weekend, at-the-money implied volatility at both mid- to -long- dated tenors for BTC and ETH have registered only a slight increase.
One-month BTC expiries for example have seen ATM IV rise from 37% to 40% for BTC and 51% to 54% for ETH. Expiries further out such as 60-day options have jumped by only 2 vol points.
Macro-inspired volatility has shown a marked impact only at shorter tenors. The 7-day ATM IV, for example, jumped from 31% to 40% for BTC and 42% to 52% for ETH.
However, on a longer lookback, recent jumps at the front end of the term structure have done very little to abate the overall trend of lower volatility since the local high in late November 2025.
Despite a choppy macro backdrop, taking activity in Ethereum continues to see increased institutional demand – DAT heavyweights BitMine have staked more of their stockpile (of 3.5% of circulating supply) and applications for staking-enabled ETH ETPs are supporting staking demand.
But while the Beacon chain balance is set to grow considerably, staking yields are drifting below 3% as total active stake rises. Increased supply of staked ETH adds to Ethereum network upgrades aimed at cheapening blockspace, meaning higher L1 throughput is bullish for network usage but not a clear catalyst for higher staking returns.