Bitcoin Stumbles as Ether Outperforms: Market Divergence Signals Shifting Dynamics

Bitcoin's underperformance against Ethereum and broader crypto assets reveals intriguing market fragmentation as traders rotate into altcoins.

Ether's Resilience

While Bitcoin struggles to maintain momentum, Ethereum continues attracting developer activity and institutional interest—fueling its relative outperformance in today's session.

Broad Market Strength

Smaller cap tokens across DeFi, gaming, and AI sectors are posting gains that dwarf Bitcoin's sluggish movement, suggesting capital is hunting for alpha beyond the flagship cryptocurrency.

Traditional finance analysts scratching their heads at the divergence might want to check their spreadsheets—apparently not everything in crypto moves in perfect correlation, no matter how much your risk models wish it did.

Derivatives Positioning

• Bitcoin open interest (OI) across top derivatives venues has started to slip, which is in line with the downward price action over the past few days, implying traders are actively exiting their leveraged positions.
• BTC OI now stands at $30.3 billion, just shy of the all time high at $32.6 billion, Velo data shows. Three-month annualized basis is still rising, and is currently 8%- 9% across all exchanges, implying that the basis trade is still profitable.
• In options, bitcoin's upward-sloping implied volatility curve suggests the market expects long-term volatility to be higher than short-term, while other metrics point to a more immediate bearish outlook.
• Specifically, the recent move of the 25 delta skew into negative territory for near-term maturities indicates a clear shift in market sentiment, with traders paying a premium for puts over calls to gain downside protection.
• The bearish sentiment is confirmed by the 24-hour put/call volume, which shows a significant skew towards puts, another sign traders are actively hedging against or speculating on a price decline.
• Funding rate APRs across major perpetual swap venues are starting to bounce back at around 8%-10% annualized, according to Velo data.
• BTC annualized funding on Binance turned negative (-0.39%) for a short period today before bouncing back to around 10%. This indicates that while there may have been pockets of bearish sentiment, the overall market trend is starting to be more supportive by traders willing to pay a premium to bet on a price increase.
• Coinglass data shows $266 million in 24 hour liquidations, skewed 58% towards shorts. ETH ($99 million), BTC ($47 million) and SOL ($20 million) were the leaders in terms of notional liquidations. The Binance liquidation heatmap indicates $111,593 as a core liquidation level to monitor in case of a price rise.

Token Talk

• Cronos (CRO) defied Tuesday's bearish crypto sentiment, rallying more than 56% after Crypto.com and Trump Media (DJT) said they planned to create a $6.4 billion CRO treasury company.
• Crypto treasury announcements have occurred almost daily over the past month as companies begin to adopt and adapt the approach pioneered by Michael Saylor's Strategy (MSTR).
• Still, the price action often fails to match what might be perceived as a bullish event. When Verb Technology Co. (VERB) announced a $558 million private placement to establish a toncoin (TON) treasury, TON almost immediately fell by around 10%.
• This CRO deal is different. Firstly it is tied to Trump Media, a company linked to President Donald Trump, but secondly — and arguably more importantly — it gives a use case to the cronos token that was previously used predominately as an exchange token for Crypto.com.
• The deal includes the creation of a new rewards system on Truth Social that will allow users to convert the platform's “gems” into CRO tokens, with further plans to enable subscription payments and discounted services using CRO.
• Bloomberg noted that Crypto.com CEO Kris Marszalek donated $1 million to Trump's inaugural committee and also visited Trump's Mar-a-Lago home after the election victory.
• CRO currently trades at $0.225 despite being down at $0.141 last week, the news lifted 24 hour trading volume up by 1,300% to more than $1 billion as it became a market outlier while bitcoin and ether languished near critical levels of support.