We’ve seen a strong overall market recovery in the crypto market, as bitcoin has made a push back above $40,000 last Friday. The entire crypto market is currently strongly correlated, signaling that we’re not witnessing any notable altcoin rotations as of now. This could indicate a cautious sentiment among traders, as traders are reluctant to move out on the risk curve chasing beta.
We noted in our last report that the sell-off could be nearing an exhaustion point based on signals from the perpetual swaps market. We’ve since seen the momentum change. However, both the futures basis and funding rates remain unusually low. This suggests that leveraged traders are not eagerly optimistic over the recent strength in the market. Meanwhile, CME’s basis is trending up, having bottomed out alongside BTC’s Jan 24th bottom, while exchange-traded bitcoin products in the U.S. and Canada are also showing promising inflows. The tendencies from CME and the ETPs could indicate a brewing bullish sentiment among institutional traders.