In the wake of Michael Saylor’s 32-BTC sale recently, the digital asset sector’s thoughts were on BTC and ETH.
“Momentum is not on Bitcoin’s side this week. With $2.8 billion in cumulative outflows from Bitcoin ETFs and Michael Saylor selling 32 BTC last week, there is too much downward pressure on the price.
“What’s particularly surprising is that Bitcoin is falling even as the US stock market – driven by exuberance around AI – is continuing to hit new highs. This means Bitcoin is being driven more by crypto-specific sentiment, and this is close to rock bottom right now.
“Having broken below the $73K support level, Bitcoin now needs to hold above $70K to avoid a more significant slide lower. A deal between the US and Iran would offer some relief, but it would likely not cause a major bounce at this point in the cycle.
“The upcoming SpaceX IPO, expected next week, is also a drag on the BTC price. Given its size, it’s set to draw speculative capital away from other risky assets, and so the crypto market will likely suffer. We may be starting to see this play out already. All in all, it’s not a good setup for the Bitcoin price in the short term.”
– Nic Puckrin, macro analyst and co-founder of Coin Bureau
“Reflective of the downward moves in our in-house Bitcoin (BTC) and Ethereum (ETH) Risk Appetite Indexes, risk sentiment across crypto majors has continued to weaken over the past week. The recent leg lower in BTC and ETH has coincided with Michael Saylor’s Strategy Inc. selling $2.5 million of its $52 billion BTC hoard, breaking the CEO’s ‘Sell a kidney if you must, but keep the Bitcoin’ mantra, as well as the longest outflow streak from spot Bitcoin ETFs since launch.
“While it is tempting to view BTC’s drop towards the low $60K region as reflective of risk sentiment across the entire crypto market, this is not exactly true. Speculative froth has built up in other areas of the market where risk appetite remains high.
“There is some evidence of a potential capital rotation, or at the very least, speculative froth, in perpetual futures contracts tracking real-world assets, as well as pre-IPO perps, at the same time we see weakening in BTC and ETH sentiment.
“Focusing on Hyperliquid, the decentralized venue that has now become synonymous with price discovery outside of market hours, volumes in BTC and ETH perps are pinned near multi-quarter lows ($2 billion for BTC and $0.6-0.7 billion for ETH, respectively), while pre-IPO equity perp volumes have roughly 25x’d over the same period of time. More broadly, crypto-native speculators have found a particular interest in real-world asset perp contracts that provide 24-7 access to macro-assets.
“The three highest-volume perp contracts on the platform are XYZ100, a Nasdaq-100/ QQQ equivalent, SP500, an S&P 500 equivalent and CL, which tracks WTI crude oil prices. Together, those three perps have seen $1.3 billion per day in combined volume and $27.1 billion of notional volume over the last 30 days — equivalent to 112% of Hyperliquid’s ETH perp volume and ~38% of its BTC perp volume.
“The rotation is not measured in matched dollars; instead, it is more reflective of a rotation in the attention that had previously been used to backstop bids in the majors now finding itself in a different corner of the market. When price weakens while turnover is already compressed, as we see in BTC and ETH, it is a sign that there is no committed buying stepping in to absorb supply.
“Crypto-native punters are also finding the pre-IPO segment of the market of particular interest. These perp contracts provide economic exposure to privately listed companies, with the ratio of pre-IPO perp volume to ETH notional perp volume increasing from a negligible ~0.1% to a 3.0% peak. Volume has jumped from a sub-$5 million per day baseline to upwards of $50 million per day, led by perp contracts tracking SpaceX.
“The selloff in BTC and ETH below key support levels is not reflective of the entire crypto market. Risk-appetite remains considerably high in tokens such as Hyperliquid’s HYPE token, the only major asset where our Risk Appetite Index is ticking higher, as well as in real-world asset perp contracts and pre-IPO markets.
“Traders are utilizing venues which provide access to BTC, ETH, and a basket of other assets under a single roof, which is appearing to, at least partly, take interest away from our traditional majors.”
– Thahbib Rahman, research analyst at Block Scholes