Bitcoin Looking Bearish While Equities Are At All-Time Highs: What Gives?

In a stark contrast to the buoyant mood in traditional equity markets, the sentiment in the cryptocurrency market has turned notably bearish, according to a new report.

What Happened: According to QCP Capital, while U.S. equities are enjoying all-time highs and Asian markets are largely in the green, driven by expectations of an imminent rate cut and a “soft landing” for the global economy, the crypto market is showing signs of significant stress.

QCP Capital highlighted that Bitcoin's BTC/USD perpetual funding rates plunged to -13% over the weekend, marking the lowest levels seen since 2022.

This sharp drop in funding rates underscores a growing bearish sentiment among crypto investors, in contrast to the optimism seen in equity markets.

“The market is eerily optimistic with US equities at all-time highs… However, there are still signs of nervousness,” the report noted, referencing the 1% swing in the S&P 500 options market ahead of Federal Reserve Chair Jerome Powell's upcoming Jackson Hole speech.

The divergence in sentiment between equities and cryptocurrencies is further accentuated by concerns over the potential unwind of the USD/JPY carry trade.

With Bloomberg reporting increased bets on further interest rate hikes by the Bank of Japan, QCP Capital suggests that this could trigger another leg down across the markets, including cryptocurrencies.

Also Read: Bitcoin, Ethereum Start The Week Down 2.5%—Are Modest ETF Flows To Blame?

Why It Matters: Despite the bearish tone in the crypto space, QCP Capital remains cautiously optimistic about the market’s long-term prospects.

The firm recommended a downside Sharkfin as a potential zero-cost hedge for those seeking short-term downside protection in these uncertain times.

Adding to the tension, a market report from Hyblock Capital suggests that the global economy is delicately balanced between recession fears and signs of economic recovery.

This fragile state has led to heightened sensitivity in markets, with even minor economic indicators or political developments causing significant volatility.

The report also noted a recent uptick in volatility indices, such as the Binance Volatility Index (BVOL) and the Deribit Volatility Index (DVOL), signaling a possible increase in market turbulence.

As the crypto market navigates these choppy waters, all eyes will be on the Benzinga Future of Digital Assets event on Nov. 19.

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Image created using artificial intelligence with Midjourney.