Crypto wrap: Bitcoin gains as futures turn bullish despite equity divergence

Bitcoin BTC traded modestly higher on Thursday, matching the broader cryptocurrency market even as US equities hovered near record highs and investors continued to monitor macroeconomic developments ahead of the Federal Reserve's September meeting.

The world's largest cryptocurrency gained about 0.22% over the past 24 hours to trade near $64,684, while the broader CoinMarketCap 20 Index rose 0.33%. 

The move came as the S&P 500 traded little changed after recent record highs, with markets also tracking developments surrounding a potential agreement to reopen the Strait of Hormuz.

Despite Bitcoin's daily gains, its longer-term performance has continued to trail US equities.

Bitcoin lags equities despite strong correlation

Thahbis Rahman, Research Analyst at Block Scholes, told Invezz that though US equities are trading near record territory, Bitcoin has not enjoyed the same success. 

Rahman noted that the divergence does not necessarily signal a breakdown in Bitcoin's relationship with traditional risk assets.

According to the analyst, the rolling 90-day correlation between Bitcoin and the S&P 500 remains historically elevated at around 45%. Instead, Bitcoin has simply participated less in market rallies while declining more sharply during periods of weakness.

Futures positioning turns more constructive

Derivatives data showed improving sentiment beneath the surface, with several indicators pointing toward a more constructive outlook for Bitcoin.

The long-short taker volume ratio turned bullish for the first time in at least a week, with long positions accounting for nearly 61% of market orders.

Bitcoin futures open interest also increased to around 759,000 BTC. 

However, analysts noted that similar increases since early June have proved short-lived, with open interest repeatedly falling back toward 740,000 BTC.

In the options market, traders increasingly accumulated bullish call options at significantly higher strike prices. 

Among the most actively traded contracts on Deribit were Bitcoin calls at $80,000 and $96,000, indicating growing interest in upside scenarios.

XRP weakens as Ethereum and Solana remain subdued

Performance across the broader cryptocurrency market remained mixed.

XRP fell 1.8% in the last 24 hours as it continued to show signs of weakness. 

Open interest climbed 1.7% over the past 24 hours to 2.35 billion tokens while the token's price fell to around $1.04, its lowest level since early July.

Ethereum gained 1.5%. Open interest also gained 0.53% to $26.77 billion.

Solana also continued to unwind leverage, with futures open interest declining for another consecutive day to 61.31 million tokens after exceeding 76.5 million in late June.

Crypto to see continued muted activity due to monetary policy

The Block Scholes analyst also pointed to monetary policy expectations as another headwind for digital assets.

"The relief from the choice not to deliver a hike in last week’s FOMC meeting that may have ordinarily sparked a crypto bid was muted", Rahman said.

Although the Federal Reserve refrained from raising interest rates at its latest meeting, markets continue to price in roughly a 65% probability of a 25-basis-point rate increase in September.

Rahman added that seasonal trading patterns could also keep volatility subdued over the coming weeks.

"Seasonality in crypto volatility suggests that we should expect that muted activity to continue ahead of the next FOMC meeting in September," he said, noting that uncertainty around this year's Jackson Hole symposium is greater because Federal Reserve Chair Kevin Warsh has expressed reluctance to provide forward guidance.