Global Stocks Hit Record Highs as Bitcoin Struggles to Follow the Rally

Derivatives data points to muted activity in bitcoin and ether, while traders are taking more aggressive positions in select altcoins.

Bitcoin (BTC) traded largely unchanged, rising just 0.16% since midnight UTC to hover near $64,000. The lack of movement came even as global stock markets reached fresh record highs, supported by optimism surrounding artificial intelligence growth and progress toward reopening the Strait of Hormuz, which contributed to lower oil prices.

The MSCI All Country World Index gained 0.4% as it moved toward another record close. Its Asia-Pacific benchmark advanced 2.2%, while Australian equities also reached new highs after the S&P 500 and Dow Jones Industrial Average ended Tuesday at record levels.

The broader CoinDesk 20 (CD20) index remained flat, with 11 of its components posting gains and nine moving lower.

The disconnect between crypto and traditional markets highlights weakness within digital assets. U.S. spot bitcoin ETFs recorded $5.4 billion in net outflows during the first half of the year as investors redirected capital toward AI-related assets.

DWF Labs noted in a report that crypto investment demand from both institutions and retail investors has weakened as artificial intelligence has captured a larger share of market attention and capital. The firm added that most sectors, not just crypto, have struggled to outperform AI-related investments over the past year.

Traders are now watching upcoming U.S. economic releases, including employment data and the ISM services PMI, for potential catalysts that could influence market direction.

Circle Internet (CRCL), the issuer of USDC, reported a 7% year-over-year increase in second-quarter revenue. However, revenue of $701 million came in below analyst expectations, according to Bloomberg.

Galaxy Digital (GLXY) was also scheduled to announce earnings, while Riot Platforms (RIOT) postponed its report indefinitely.

Derivatives Market Overview

Futures sentiment remains cautious:
Crypto futures positioning continues to lean bearish, with short positions representing 51% of taker volume. While sellers still have a slight advantage, the imbalance has narrowed from the recent 52/48 split favoring shorts.

PUMP leads token gains:
PUMP was the strongest performer among the top 100 cryptocurrencies over the past 24 hours, surging 115%. The rally triggered increased futures activity, pushing open interest up 9% to 84.76 billion tokens. Despite the sharp daily rise, overall participation remains within recently observed ranges.

Open interest movements:
XLM, ZEC, and BNB recorded increases in open interest, suggesting traders are building new positions. In contrast, SHIB, HBAR, and LTC saw declines, potentially indicating capital withdrawals. Bitcoin and ether futures markets remained relatively quiet.

Aggressive buying emerges in select assets:
ZEC and bitcoin posted positive open-interest-adjusted cumulative volume delta over the past 24 hours, showing stronger market-buying activity among major assets. This suggests traders are using market orders to enter long positions rather than waiting for lower-priced limit orders. XLM and DOGE showed weaker demand.

XLM sees heavy bearish positioning:
XLM recorded a significantly negative annualized perpetual funding rate of -23%, indicating that perpetual futures are trading below spot prices and reflecting stronger bearish expectations among traders.

Volatility remains suppressed:
Bitcoin’s 30-day implied volatility index continues to trade near 36% after recently falling to historically low levels. Despite expectations of a rebound, volatility has remained subdued. Ether’s volatility index, EVIV, is showing a similar trend.

Options markets favor calls:
Bitcoin and ether options activity on Deribit continues to be dominated by call options, which provide upside exposure and typically reflect bullish positioning. However, OTC desk Paradigm reported bearish ether risk reversals, suggesting some investors are protecting against downside moves.

Stablecoin Market Trends

Tether’s USDT market capitalization has declined by $4 billion over the past 60 days, marking one of the sharpest contractions recorded, according to CryptoQuant.

USDT supply typically rises when new capital enters the crypto market, as investors convert dollars into stablecoins to purchase digital assets. A decline in supply suggests that liquidity is leaving the ecosystem.

CryptoQuant described the current contraction as a possible sign that selling pressure is nearing exhaustion. Historically, major USDT supply declines have often appeared closer to market bottoms rather than at the beginning of prolonged downturns.

However, the signal remains uncertain. Similar contractions in early 2023 and mid-2026 were followed by bitcoin recoveries, but the current decline is also occurring alongside weak demand, with bitcoin trading sideways since May.

A stronger bottom signal would require USDT supply to begin recovering. Until that happens, continued contraction indicates that capital is still moving out of the crypto market.

Investors should focus on the direction of USDT supply changes rather than the total market capitalization. A move back toward zero in the 60-day change would suggest renewed liquidity entering the market, while further declines would indicate continued capital outflows.

About The Author