Bitcoin Looks Bearish While Stocks Are At All-Time Highs: What’s Going On?

In stark contrast to the upbeat mood in traditional stock markets, sentiment in the cryptocurrency market has turned decidedly bearish, according to a new report.

What happened: According to QCP CapitalAs US stocks hit all-time highs and Asian markets are largely in the green, buoyed by expectations of an imminent rate cut and a “soft landing” for the global economy, the cryptocurrency market is showing signs of significant stress.

QCP Capital stressed that Bitcoin‘s Bitcoin/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 cryptocurrency investors, contrasting with the optimism seen in stock markets.

“The market is oddly optimistic, with U.S. stocks at all-time highs… However, there are still signs of nervousness,” the report noted, referring to the 1% move in the S&P 500 options market ahead of the Federal Reserve chairman election. Jerome Powellnext Jackson Hole speech.

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

As Bloomberg reports increased bets on further interest rate hikes from the Bank of Japan, QCP Capital suggests this could trigger further declines in markets, including cryptocurrencies.

Also read: Bitcoin and 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 outlook.

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 Capital Hyblock suggests that the global economy is in a delicate balance between fears of recession and signs of economic recovery.

This fragile situation has led to increased market sensitivity, with even minor economic indicators or political developments causing significant volatility.

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

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

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Image created using artificial intelligence with Midjourney.