Crypto slides as tech stocks and gold retreat; bitcoin-Nasdaq correlation turns positive

The crypto market continued to exhibit weakness on Tuesday morning, broadly following a tech selloff across U.S. equities and a correction in the price of precious metals.

Bitcoin trades at $68,000, down 1.25% since midnight UTC, while Nasdaq futures and gold lost 0.55% and 2.4% respectively over the same period.

Altcoins also lost ground as popular memecoins PEPE, DOGE and TRUMP led the drawdown, losing between 3.5% and 4.5%.

The tech selloff has been driven by fears around artificial intelligence and how it might disrupt several industries. Bitcoin has been closely tied to Nasdaq since Feb. 3, with the correlation coefficient indicator rising from negative 0.68 to positive 0.72 over the past two weeks.

Gold, meanwhile, is currently trading at $4,928 after failing to establish a level of support above $5,000. The precious metal hit a record high of $5,600 on Jan. 28 before a historic 21.5% correction over the subsequent four days.

Derivatives positioning

• Crypto futures continue to see capital outflows. The cumulative industry wide notional open interest has declined by 1.5% to $93 billion in 24 hours, reaching fresh multi-month lows.
• Leveraged bets worth $229 billion have been liquidated by exchanges over 24 hours, with longs (bullish plays) accounting for most of the tally.
• Open interest in DOGE futures has declined by 4%, leading the trend in most majors. PEPE, LINK and AVAX have seen 3% to 5% declines in open interest.
• Open interest in futures tied to HYPE, the recent outperformer, has cooled to 44.45 million HYPE, the lowest since early December. This likely reflects profit-taking after the token outpeformed bitcoin and other majors during the recent crash.
• The market panic has ebbed, as evidenced from the sharp pullback in bitcoin and ether’s implied volatility indices from monthly highs.
• On Deribit, bitcoin and ether puts continue to trade pricier than calls, indicating lingering downside fears, however, the positioning is now longer as defensive as it was two weeks ago.

Token talk

• Altcoins continue to track bitcoin on as the “bitcoin dominance” metric has now ranged between 57.4% and 60.1% since September.
• Over the past seven days AI token MORPHO has posted a 23.5% gain, while privacy coin zcash ZEC$289.05 is up by 19% over the same period.
• Conversely, layer 1 blockchain token layer zero (ZRO) has lost 16% over the past week as it continues to lose momentum after announcing a deal to collaborate with Citadel Securities and DTCC.
• The relative weakness of several altcoins continues to persist on lower time frames, with HYPE, SUI and ASTER all losing between 3% and 4.8% since midnight UTC as the crypto market awaits a bullish catalyst.