Crypto Market Diverges from US Equities as Bitcoin Hits April Lows

The cryptocurrency market has been experiencing a significant downturn in recent weeks, with Bitcoin (BTC) plummeting to its lowest level since April. The digital currency's price has been affected by a failed attempt to break above $83,000, leading to a decline that has been ongoing for three weeks. Experts attribute the slump to a leverage wipeout that the market has not yet fully recovered from.

The divergence between the crypto market and record-chasing US equities is concerning, as it indicates a shift in investor sentiment. The S&P 500 and Nasdaq 100 index futures have been posting gains, while Bitcoin's price continues to slide. This trend has been observed since early October, with no clear explanation for why the crypto market is struggling against sectors it has historically been correlated with.

Derivatives positioning data shows a slight growth in speculative positioning, but funding rates remain positive across multiple venues at under 10% annualized. The exception is Deribit, where the funding rate spiked to 44%. Options positioning also reveals mixed signals, with one-week 25-delta skew ticking up to 12.85%, indicating slightly higher demand for downside protection.