Record-Breaking Stock Rally Leaves Bitcoin and Broader Markets Searching for Momentum

Derivatives indicators show limited activity in bitcoin and ether, while traders are showing stronger conviction in several altcoins.

Bitcoin (BTC) traded within a narrow range, gaining just 0.16% since midnight UTC and remaining close to $64,000. The lack of momentum came even as global equity markets pushed to new highs, supported by continued enthusiasm around artificial intelligence and expectations of progress toward reopening the Strait of Hormuz, which contributed to a decline in oil prices.

The MSCI All Country World Index rose 0.4% toward another record close, while its Asia-Pacific benchmark advanced 2.2%. Australian equities also reached fresh highs after the S&P 500 and Dow Jones Industrial Average finished Tuesday at all-time highs.

The CoinDesk 20 (CD20) index was mostly unchanged, with 11 tokens gaining ground and nine posting losses.

The weaker performance from crypto compared with traditional markets highlights sector-specific pressure. U.S. spot bitcoin ETFs recorded $5.4 billion in net outflows during the first half of the year as investors redirected funds toward AI-focused opportunities.

DWF Labs said investor interest in crypto has cooled among both institutional and retail participants as artificial intelligence continues to attract a larger share of available capital and market attention. The firm noted that crypto has been among several sectors unable to match AI-driven returns over the past year.

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

Circle Internet (CRCL), the issuer of USDC, reported that second-quarter revenue increased 7% year-over-year. However, the company’s $701 million revenue figure fell below expectations, according to Bloomberg.

Galaxy Digital (GLXY) was also expected to announce earnings, while Riot Platforms (RIOT) postponed its report for an unspecified period.

Derivatives Market Overview

Futures sentiment remains slightly bearish:
Crypto futures positioning continues to show a cautious tone, with short positions representing 51% of taker volume. While bearish traders maintain a small advantage, the imbalance has narrowed from the recent 52/48 split favoring shorts.

PUMP leads recent token gains:
PUMP was the strongest performer among the top 100 cryptocurrencies over the past 24 hours, climbing 115%. The surge boosted futures activity, with open interest increasing 9% to 84.76 billion tokens. Despite the daily jump, overall positioning remains within recently observed ranges.

Open interest movements:
XLM, ZEC, and BNB saw rising open interest, indicating increased trader engagement. In contrast, SHIB, HBAR, and LTC recorded declines, potentially signaling reduced exposure and capital outflows. Bitcoin and ether futures markets remained relatively quiet.

Buying pressure strengthens in select assets:
Bitcoin and ZEC showed positive open-interest-adjusted cumulative volume delta over the past 24 hours, suggesting more aggressive buying activity. Traders appear to be entering long positions through market orders rather than waiting for lower prices. XLM and DOGE displayed weaker buying pressure.

XLM futures signal bearish positioning:
XLM recorded an annualized perpetual funding rate of -23%, showing that perpetual contracts are trading below spot levels. The move reflects increased demand for short positions and growing bearish sentiment.

Bitcoin volatility stays subdued:
Bitcoin’s 30-day implied volatility index remains around 36% after recently reaching historically low levels. Although a volatility rebound was expected, the index has remained suppressed. Ether’s volatility measure, EVIV, has followed a similar path.

Options markets remain tilted toward calls:
Bitcoin and ether options trading on Deribit continues to show strong activity in call contracts, which provide upside exposure and often indicate bullish expectations. However, OTC desk Paradigm reported bearish ether risk reversals, suggesting some traders are preparing for downside moves.

Stablecoin Market Update

Tether’s USDT market capitalization has dropped by $4 billion over the past 60 days, marking one of the largest contractions on record, according to CryptoQuant.

USDT supply generally expands when new capital enters the crypto market, as investors convert dollars into stablecoins before purchasing digital assets. A reduction in supply often signals that liquidity is leaving the ecosystem.

CryptoQuant described the decline as a possible sign that selling pressure is approaching exhaustion. Historically, major USDT supply contractions have often occurred closer to market bottoms rather than the beginning of further declines.

However, the indicator remains inconclusive. Similar USDT contractions in early 2023 and mid-2026 were followed by bitcoin recoveries, but the current decline is also occurring alongside weak demand as bitcoin has moved sideways since May.

A stronger recovery signal would emerge if USDT supply begins expanding again. Until then, continued contraction suggests that liquidity continues to flow out of crypto markets.

Investors should focus on the trend of USDT supply changes rather than its overall market size. A move back toward zero in the 60-day change would suggest renewed capital inflows, while further declines would indicate continued liquidity withdrawal.