CoinDesk 20 Index: 2,927.56 +1.66%
Bitcoin (BTC): $90,660.93 -0.34%
Ether (ETH): $3,085.79 -1.21%
S&P 500: 5,870.62 -1.32%
Gold: $2,592.87 +1.2%
Nikkei 225: 38,220.85 -1.09%

A message from Kraken

Solana' SOL topped $240 for the first time in three years as bitcoin (BTC) took a breather above $90,000. SOL advanced 4.3% in the past 24 hours, outperforming the broad-market benchmark CoinDesk 20 Index's 1.6% gain. Bitcoin, meanwhile, pulled back slightly to just above $90,000 before U.S. trading hours as investors digested the monster rally to records since Donald Trump's election victory. Still, the largest crypto's pause may be only temporary: BTC may potentially climb as high as $200,000, according to BCA Research analysis of fractal patterns.

JPMorgan's retail sentiment score for bitcoin and bitcoin-tied assets hit a record as crypto euphoria spread. The metric, which is designed to gauge the sentiment of retail investors toward cryptos based on activity in BTC-related products including spot ETFs, climbed to an all-time high of 4 last week, indicating investor frenzy. MicroStrategy (MSTR) options positioning also shows extreme levels of bullishness typically seen near local market peaks. "Call skew in MSTR is so wildly euphoric that it is hard to imagine we don't see a more meaningful drawdown unless bitcoin continues to move in a parabolic fashion higher," pseudonymous analyst Markets&Mayhem said.

XRP catapulted to a three-year high over the weekend to more than $1.20 with futures bets soaring to record levels. Open interest for XRP derivatives surpassed $2 billion on Sunday, betting on further volatility in the price of the sixth-largest cryptocurrency by market capitalization. The trend is fueled by optimism about easing regulatory headwinds as a crypto-friendly Trump administration may benefit tokens linked to U.S.-based companies such as Ripple Labs. Additionally, the forthcoming addition of Ripple's RLUSD stablecoin and French bank Société Générale-backed euro stablecoin to XRP Ledger could boost institutional adoption of the network.

The market perceives bitcoin as a risk-on asset — one of the riskiest assets in the market. The higher the degree of risk, the further out on the risk curve the asset is.

Looking at TradingView data, on a 30-day correlation basis over the past five years, bitcoin has experienced periods of 1:1 correlation with the Nasdaq Composite. This was very much the case for 2021 and 2022, when both assets rose together and fell together. Some would say they were joined at the hip.

However, since March, the Nasdaq has continued to make new all-time highs while bitcoin consolidated between $50,000 and $70,000. That's changed since Donald Trump won the U.S. election on Nov. 6. Bitcoin has only continued to soar while the Nasdaq has stagnated.

The current 30-day correlation between the two assets is just 0.46, one of the lowest recorded levels in the past five years. In September, we observed a negative correlation of almost -0.50.

This is also the case between the two largest tokens by market cap, bitcoin and ether (ETH). Since 2019, ether and bitcoin have had a 1:1 correlation, with a brief dip in 2021, when ether soared beyond bitcoin during the bull market as bitcoin stagnated. Now, however, on a 30-day rolling correlation, bitcoin and ether have just a 0.35 correlation, the second-lowest recorded level.

A message from Kraken

- Omkar Godbole