This report is for professional investors and information purposes only. Persons without professional investment experience should not rely on it. Not investment advice or a personal recommendation. Cryptoassets are high risk and volatile and you may lose all capital invested. See full risk information at the end of this document.
- Performance: Last week, major digital assets like Bitcoin and Ethereum continued to outperform traditional risk assets like US equities amid ongoing net inflows into global crypto ETPs, marking the third consecutive week of Bitcoin outperformance vs the S&P 500.
- Cryptoasset Sentiment Index: Our Cryptoasset Sentiment Index remains very elevated, signalling euphoric sentiment; near-term correction risks remain elevated.
The Cryptoasset Sentiment Index is a composite indicator consisting of 15 different sub-indicators covering sentiment, on-chain, derivatives, flows developments as well as sentiment in traditional financial markets. A 90-day rolling z-score is used to standardise and aggregate these sub-indicators. - Chart-of-the-Week: The 260-days correlation between Bitcoin and the S&P 500 has declined to its lowest level since 2015 - the last time correlation was this low preceded Bitcoin's ~9,800% rally from mid-2015 to late-2017, signalling potential catch-up potential vs US equities.
Chart of the Week
Performance
Last week, major digital assets like Bitcoin and Ethereum continued to outperform traditional risk assets like US equities while gold underperformed due to ongoing net inflows into global crypto ETPs.
This was the third consecutive week of outperformance of Bitcoin vs the S&P 500. In that context, it is worth highlighting that the 260-days correlation between the S&P 500 and Bitcoin (in log-levels) has declined to the lowest level since 2015 (Chart-of-the-Week).
Note that the last time the Bitcoin-stock correlation was this low was right before the rally from mid-2015 to late-2017. In fact, from Bitcoin’s low in mid-2015 to the cycle high in late-2017, Bitcoin rallied by roughly ~9,800%. Although we think such a performance is rather unlikely to repeat due to Bitcoin’s more advanced adoption, it signals that there may be some catch-up potential between Bitcoin and US equities. Nonetheless, at the very least, this inverse correlation between Bitcoin and US equities has important implications for multiasset investors with a diversified portfolio. We have highlighted the “AI is sucking the oxygen out of the room” narrative in our previous Bitcoin Macro Investor reports as well as one of the major reasons for this decoupling. We genuinely think that Bitcoin’s underperformance has been a reflection of tighter financial conditions across the globe, which can be seen in rising sovereign (real) bond yields as well (i.e. the “canary in the liquidity coal mine” view).
In fact, there is increasing evidence that AI-related corporate debt issuances by major software companies are competing directly with sovereign issuers in the bond market, driving up yields in the process and tightening financial conditions. AI-related capex investments are increasingly being financed via debt issuances which increase the demand for capital market financing and crowd out other debt issuers. On a global scale, there is also evidence that excess liquidity growth is already decelerating sharply.
The key to understand is that these decouplings between Bitcoin and stocks are usually not sustainable as bigger corrections in Bitcoin don’t happen in isolation and usually foretell larger stock market corrections in advance as highlighted here. Therefore, we there still expect a larger stock market correction to occur with a lag due to the strong degree of financial tightening.
In contrast, based on our quantitative analyses, Bitcoin appears to be more sensitive to changes in monetary policy expectations while stocks appear to be more sensitive to global growth expectations – another reasons for the current decoupling between Bitcoin and stocks.
Hence, a re-rating in global growth expectations to the downside should pressure stocks while Bitcoin may be supported via an inverse improvement in monetary policy expectations.
In plain English: Once global growth expectations falter, expectations for easier monetary policy will increase, i.e. rate hike expectations might reverse into rate cut expectations again. We think that in, such a scenario, Bitcoin could continue to outperform and decouple from the broader stock market.
That said, so far, there is no indication for a policy pivot by the Fed. Although Scott Bessent has signalled to ease fiscal policy, there is no indication by Kevin Warsh to postpone or reverse rate hikes just yet. At the time of writing this report on early Monday morning, Fed Funds Futures are still pricing a 59% probability for a Fed rate hike in September. It will be interesting to see how many rate hikes the FOMC will pencil into its Summary of Economic Projections (aka “dot plot”) since Warsh has signalled to provide little to no forward guidance anymore. The FOMC is scheduled to convene next week on the 15th and 16th of September.
Irrespective of the FOMC meeting, it is worth pointing out that bond yields could “do the job” for the Fed by continuing to rise and tightening financial conditions without the Fed even delivering a single rate hike.
Therefore, investors should continue to watch long-term bond yields as the key signal for when financial conditions may become too tight for the Fed to intervene in the bond markets (via renewed QE) and to reverse its monetary policy course again.
In general, among the top 10 crypto assets Zcash, Monero, and Dogecoin were the relative outperformers. Ethereum slightly outperformed bitcoin last week.
Bottom Line: Bitcoin's correlation with the S&P 500 has dropped to its lowest level since 2015 - a setup that last preceded a massive rally - signalling catch-up potential versus equities, even as tighter financial conditions driven by AI-related debt issuance weigh on both. Since such decouplings rarely last, we still expect a delayed stock market correction; but if faltering growth flips rate-hike expectations toward cuts, Bitcoin could keep outperforming. Long-term bond yields remain the key signal to watch for a Fed policy reversal.
Sentiment
Our in-house “Cryptoasset Sentiment Index”[1] has increased substantially, having cooled last week from its highest level since 2024, the week prior. It now sits just below 1, a level that tends to mark stretched sentiment.
At the moment, 12 out of 15 indicators remain above their short-term trend.
The most notable increases include the Altseason Index and BTC exchange inflows. This comes as crypto dispersion improves, whilst the BTC funding rate and 1M implied vol flip negative. Together, this suggests altcoin outperformance is led by a wider breadth of narratives, whereas BTC momentum and speculation have slowed. Investors are moving coins onto exchange, likely with a view to sell, as net unrealised profits decline alongside rising put-call volume, pointing to hedging behaviour and a more pessimistic outlook.
The Crypto Fear & Greed Index increased slightly, reaching year-over-year highs. Remaining in "greed" territory. This is consistent with our increasing Sentiment Index.
Performance dispersion increased slightly, as all subsectors (L1, L2, Meme, DeFi, AI, Gaming) posted positive week-on-week returns. L2s outperformed up ~30%.
When dispersion increased, it may indicate that the market appears to be driven by a more diverse set of narratives which, in our analysis, has historically been associated with periods of increasing risk appetite in prior market cycles.
Altcoin outperformance vis-à-vis Bitcoin increased to 95% of the altcoins tracked in our index. This is consistent with improving Sentiment, Fear and Greed and Crypto Dispersion.
Sentiment in traditional financial markets as measured by our in-house measure of Cross Asset Risk Appetite (CARA) has increased slightly although remained broadly flat from 0.87 to 0.88 over the past week, signalling risk appetite remains broadly unchanged but still positive.
The CME Bitcoin Commercials Net Positioning metric captures the difference between long and short CME Bitcoin futures contracts. The reading has declined to -5.35% of open interest, suggesting commercials have continued to unwind short leverage.
Bottom Line: Crypto sentiment and the Fear and Greed Index improved this week, bolstering altcoin outperformance and dispersion as a wider breadth of narratives took hold. This came despite CARA remaining broadly unchanged, and despite BTC investors appearing to reduce risk as momentum and speculative fervour declined on a temporarily weaker outlook.
Fund Flows
Global crypto ETPs experienced around +1,248 mn USD in net inflows last week, across all types of cryptoassets, after +1,753.1 mn USD in net inflows the previous week.
Global Bitcoin ETPs experienced net inflows of +1,008.4 mn USD last week, of which +965.9 mn USD in net inflows were related to US spot Bitcoin ETFs.
The Bitwise Bitcoin ETF (BITB) in the US experienced net inflows of +41.6 mn USD last week.
In Europe, the Bitwise Physical Bitcoin ETP (BTCE) experienced net outflows equivalent to -1.5 mn USD, as the Bitwise Core Bitcoin ETP (BTC1) experienced net inflows of around +1.6 mn USD.
The Grayscale Bitcoin Trust (GBTC) posted net outflows of -48 mn USD whereas, the iShares Bitcoin Trust (IBIT) experienced net inflows of around +691.5 mn USD last week.
Meanwhile, global Ethereum ETPs experienced +168 mn USD in net inflows last week, of which US spot Ethereum ETFs recorded net inflows of around +133.7 mn USD on aggregate.
The Grayscale Ethereum Trust (ETHE) posted net outflows of -37 mn USD, whilst the iShares Ethereum Trust (ETHA) saw net inflows of +136.4 mn USD.
The Bitwise Ethereum ETF (ETHW) in the US experienced net inflows of +3.7 mn USD last week.
In Europe, the Bitwise Physical Ethereum ETP (ZETH) recorded no net inflows or outflows, whilst the Bitwise Ethereum Staking ETP (ET32) saw net inflows of +1.8 mn USD.
Altcoin ETPs ex Ethereum also saw net inflows of +83.4 mn USD last week.
Thematic & basket crypto ETPs posted net outflows of -11.8 mn USD on aggregate last week. The Bitwise MSCI Digital Assets Select 20 ETP (DA20) recorded no net inflows or outflows last week.
Bottom Line: Demand stayed positive but narrowed markedly, with aggregate inflows falling by roughly 29% week on week. Bitcoin absorbed the bulk of the allocation, accounting for just over 80% of the weekly total, whilst appetite for Ethereum and the broader altcoin complex cooled sharply from the prior week. That moderation stands in contrast to our in-house Cryptoasset Sentiment Index and Altseason Index, which both rose substantially, suggesting flows were a smaller driver of last week's performance, instead, more likely narrative- and leverage-driven.
On-Chain Data
Bitcoin spent the past week consolidating following the sharp repricing seen in August. Price traded between approximately $77.3k and $81.3k before ending the week near $79.9k, representing a seven-day gain of around 2.1%. The ability to hold the majority of August’s gains remains constructive, particularly given the renewed macro volatility observed across broader risk assets.
Diving deeper, price remains elevated and continues to hold above both the 200-day moving average near $70k and the Short-Term Holder cost basis near $71k, which we view as important measures of local market momentum. Both levels have now been decisively reclaimed. More recently, price has also moved above the True Market Mean near $76k, representing a broader market equilibrium level.
However, despite the strength of the recent price action, near-term conditions may be becoming somewhat elevated. Price is now approaching the +1σ deviation band around the Short-Term Holder cost basis near $83k. Across the previous cycle, moves beyond this threshold were frequently associated with locally elevated conditions and increased sell-side pressure, suggesting that the market may require time to digest the recent advance.
Alongside this, the average ETF inflow cost basis also sits near $83k, reinforcing the importance of this level as a key resistance threshold. Spot demand from the ETF complex was a major contributor to the previous bull market. Following this logic, a decisive reclaim of the ETF cost basis would suggest a meaningful repair in sentiment and profitability across this investor cohort.
These measures also align with the $83k technical higher-high threshold on both the weekly and monthly timeframes. From a purely technical perspective, the market therefore remains within the prevailing downtrend. The confluence of technical structure, on-chain pricing measures and institutional cost basis around this region reinforces its significance. While our broader on-chain framework suggests that the transition into a bull-market regime has already begun, a decisive reclaim of $83k would provide stronger technical confirmation that the bear-market structure has been broken.
On balance, the market’s ability to retain the majority of the ground gained during the recent upward surge suggests that underlying demand conditions remain relatively resilient. Participation has cooled from the elevated levels observed during the initial breakout but remains healthy on balance. Options and DAT activity continue to rank strongly, while on-chain and ETF volumes remain around the middle of their recent distributions. Spot and futures activity are comparatively softer. Taken together, the volume structure suggests that market engagement remains constructive, albeit more uneven as participation normalises from recent extremes.
| Market | 7D Sum (USD) | 1Y Percentile |
|---|---|---|
| Spot | $38.6bn | 15.6% |
| Futures | $298.0bn | 33.6% |
| Options | $39.9bn | 79.0% |
| On-chain | $37.8bn | 49.7% |
| ETF | $14.5bn | 43.7% |
| DAT | $18.3bn | 75.1% |
Importantly, Bitcoin can remain within a constructive market structure even in the event of a meaningful drawdown. The Short-Term Holder cost basis and 200-day moving average, clustered around $70k, suggest that price could decline by roughly $10k from current levels while still remaining above key measures associated with constructive bull-market conditions. In fact, a retest and successful defence of this region, confirming a flip from resistance into support, could represent a healthy structural development. Given the speed of the recent advance, a period of consolidation would allow local and broader market equilibrium levels to converge towards price, potentially establishing a stronger foundation for the next deviation higher.
Whilst we believe the bull market has begun, it remains important to trade the market that is presented rather than rely solely on a base-case view. In a tail-risk downside scenario, the region bounded by the Realised Price near $53k, representing the market’s average cost basis, and the 200-week moving average near $65k remains important. Historically, these measures have bracketed the areas in which terminal cycle lows have formed during deep bear markets. We do not view a return to this region as the base case, but believe it is prudent to remain aware of where price could gravitate should a more severe downside event emerge.
Futures, Options & Perpetuals
Over the past week, BTC perpetual futures open interest declined by approximately 8.7k BTC, representing a modest reduction in positioning. CME futures open interest also declined by around 3.7k BTC versus the prior week, indicating that positioning softened across both offshore and institutionally oriented futures markets.
Liquidations remained comparatively subdued following the surge in short liquidations towards the back end of August. Combined long and short liquidations totalled just under $2bn over the week, considerably below the roughly $3bn liquidated on 19 August alone. This suggests that the recent consolidation has occurred without another significant forced deleveraging event.
Locally, sizeable estimated liquidation concentrations sit near $80.5k to the upside and $79k to the downside, creating a relatively tight corridor around current price. This positioning could contribute to an increase in short-term volatility should price move decisively towards either cluster. Zooming out, larger concentrations remain near $84k to the upside, while the most significant downside cluster sits considerably lower near $52k.
Perpetual funding rates, measured on a seven-day moving average, ended the week positive at approximately 4.4% annualised, down materially from 5.3% a week earlier. Futures positioning therefore remains long-biased, although the premium investors are willing to pay to maintain long exposure continues to moderate.
Across options markets, BTC open interest on major exchanges increased by approximately 24k BTC as positioning continues to rebuild following the August contract expiry. The put-to-call open interest ratio across major crypto-native exchanges declined to 0.56, indicating a lower relative concentration of positioning in puts. Interestingly, the equivalent ratio across IBIT options also declined to 0.70. Using the distinction between crypto-native and institutional venues as a crude proxy, this suggests some convergence in positioning, with both markets displaying a more constructive bias.
The 25-delta skew continued to decline across the term structure, indicating that downside protection has become cheaper relative to upside exposure. This aligns with the decline in put-to-call open interest, providing further evidence of improving sentiment across options markets.
| Tenor | Current Value | 3-Year Percentile |
|---|---|---|
| 1w | −0.0689 | 9th |
| 1m | −0.0383 | 23rd |
| 3m | −0.0058 | 59th |
| 6m | +0.0035 | 66th |
The shift is most pronounced across shorter-dated maturities. One-week and one-month skew sit towards the lower end of their three-year distributions, indicating that calls command a meaningful implied-volatility premium over puts and that near-term downside protection is comparatively cheap. Further out, three-month skew is close to neutral, while six-month skew remains modestly positive, suggesting that investors continue to assign a small premium to longer-dated downside protection. Overall, the curve points to a considerably more constructive near-term options market, while longer-term positioning remains more balanced.
Total gamma exposure experienced an extreme negative dislocation during the week, falling to approximately -$11.9bn on 3 September before recovering into positive territory on the latest daily reading. However, smoothing the series over seven days shows that aggregate gamma remains negative at approximately -$1.8bn, suggesting the broader positioning regime has not yet fully normalised. Negative gamma can amplify price moves in either direction as dealer hedging becomes procyclical, while the recovery in daily gamma suggests that this reflexive pressure may be beginning to ease.
At the strike level, the largest negative gamma concentrations currently sit near $82k and $85k, with additional negative exposure around $78k and $80k. Positive gamma is concentrated around $75k, $76k and $81k. This creates an important transition zone around current prices, where moves through negative gamma concentrations could experience amplified volatility, while positive gamma nodes may exert a more stabilising influence if price trades towards them.
On balance, derivatives positioning has become less aggressive without turning decisively defensive. Futures open interest and funding have moderated, while options positioning continues to rebuild and short-dated skew points to a more constructive outlook. However, aggregate gamma remains negative on a smoothed basis, leaving the market vulnerable to more reflexive price action around several important strikes.
Bottom Line
- Performance: Last week, major digital assets like Bitcoin and Ethereum continued to outperform traditional risk assets like US equities amid ongoing net inflows into global crypto ETPs, marking the third consecutive week of Bitcoin outperformance vs the S&P 500.
- Cryptoasset Sentiment Index: Our Cryptoasset Sentiment Index remains very elevated, signalling euphoric sentiment; near-term correction risks remain elevated.
The Cryptoasset Sentiment Index is a composite indicator consisting of 15 different sub-indicators covering sentiment, on-chain, derivatives, flows developments as well as sentiment in traditional financial markets. A 90-day rolling z-score is used to standardise and aggregate these sub-indicators. - Chart-of-the-Week: The 260-days correlation between Bitcoin and the S&P 500 has declined to its lowest level since 2015 - the last time correlation was this low preceded Bitcoin's ~9,800% rally from mid-2015 to late-2017, signalling potential catch-up potential vs US equities.
Appendix
Data subject to change
Combined positioning = futures and options in % of Ol
Notes
[1] The Cryptoasset Sentiment Index is a composite indicator consisting of 15 different sub-indicators covering sentiment, on-chain, derivatives, flows developments as well as sentiment in traditional financial markets. A 90-day rolling z-score is used to standardise and aggregate these sub-indicators.
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