Bitcoin BTC$74,191.24 consolidated following Tuesday's jump to $76,000 alongside a 33% drop in daily trading volume to $36.9 billion.

The largest cryptocurrency has added just 0.4% since midnight UTC after bouncing off $73,500 as it looks to establish a new level of support ahead of a potential bullish breakout.

While analysts predicted a fast move to $80,000 after $72,000 was taken out, price action has actually been much more measured. Traders with long positions took profits and those who were forced out of short positions are waiting on the sidelines to reenter.

Volatility has also retreated in commodities gold, silver and crude oil, with the war in Iran continuing to put complete risk-on mode on hold.

U.S. stocks are beginning to experience a period of prolonged upside; Nasdaq 100 futures are up 0.66% since midnight UTC, followed by the S&P 500, which has gained 0.5%.

Investors will be keeping a close eye on Wednesday's Federal Reserve meeting because although a rate pause is all but certain, increased inflation numbers due to the surge in oil prices and weaker job numbers in the U.S. could influence sentiment at the post-decision press conference.

Derivatives positioning

• Growth in bitcoin futures open interest (OI) on major exchanges has stalled alongside slightly negative fund rates. That's a sign that traders are not adding new bullish positions and bears are getting a slight edge.
• OI in ETH, XRP and SOL fell from early Tuesday highs as spot prices lost bull momentum. This suggests traders are unwinding positions, pointing to a cooling of speculative activity.
• OI in privacy-focused ZEC, which has gained nearly 4% in 24 hours and 31% in a week, has risen to 1.75 million ZEC, the most since Jan. 25. The increase in OI validates the recent price rise.
• Funding rates for XRP, BNB and SOL have flipped negative, indicating a bias for bearish short positions. Traders may be hedging for potential downside volatility after the Fed meeting.
• Bitcoin's one-day implied volatility, or the expected price swing over 24 hours, remains steady at around an annualised 50%. That equates to a 24-hour move of about 2.6%. In other words, the market doesn't see the impending Fed meeting as a major price mover for the largest cryptocurrency.
• The same can be said for ether, solana and XRP.
• On Deribit, options market positioning looks defensive in both bitcoin and ether, with skews showing a bias for put, or bearish, options.
• Block flows featured demand for limited profit potential strategies such as bitcoin call diagonal spreads and volatility bets like straddles. In ETH's case, traders preferred risk reversals and straddles.

Token talk

• The altcoin market continues to show strength with the "Altcoin Season" index hitting its highest in six months. The reading of 54/100 is a far cry from early February, when it languished at 22/100.
• Privacy coin zcash (ZEC) was one of the best-performing altcoins on Wednesday, adding 3.4% since midnight despite the rest of the market trading relatively unchanged. It has now increased by 32% in the past week.
• Decentralized finance (DeFi) lending token MORPHO also continued its rich vein of form after rising by 2.3% since midnight to add to a monthly gain of 33%.
• The best-performing benchmark over the past 24 hours has been the
  CoinDesk Smart Contract Platform Select Capped Index (SCPXC), with the index heavily weighted towards layer-1 tokens posting a 0.8% gain, while the CoinDesk Memecoin Index (CDMEME) lost ground, tumbling by 2.7%.