Cryptocurrency declines as technology shares and gold prices fall; bitcoin’s correlation with Nasdaq becomes positive.

Bitcoin declines to $68,000 as technology-driven risk aversion intensifies, gold continues its correction, and memecoins lead altcoin declines amid BTC dominance range.

Bitcoin (TheDigitalArtist/Pixabay, modified by CoinDesk)

Key points:

• Bitcoin has decreased by 1.25% to $68,000, following a downturn in Nasdaq futures and a 2.4% decrease in gold as risk appetite declines.
• The correlation between BTC and the Nasdaq has shifted from -0.68 to +0.72 since February 3, highlighting stronger connections to technology stocks.
• Memecoins PEPE, DOGE, and TRUMP led the altcoin downturn, while MORPHO and ZEC showed stronger performance over the previous week.

Details in this article

USDTUSDT$1.0000◢0.01%

The cryptocurrency market continued to show signs of weakness on Tuesday morning, largely mirroring a technology selloff in U.S. equities and a decline in precious metal prices.

Bitcoin is priced at $68,000, reflecting a 1.25% decrease since midnight UTC, while Nasdaq futures and gold have dropped by 0.55% and 2.4% respectively during the same timeframe.

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Altcoins also faced losses as notable memecoins PEPE, DOGE, and TRUMP led the decline, dropping between 3.5% and 4.5%.

The technology selloff has been fueled by concerns regarding artificial intelligence and its potential impact on various sectors. Bitcoin’s correlation with the Nasdaq has increased significantly since February 3, with the correlation coefficient moving from -0.68 to +0.72 over the last two weeks.

As for gold, it is currently trading at $4,928 after failing to maintain a support level above $5,000. The precious metal reached a peak of $5,600 on January 28 before experiencing a notable 21.5% correction over the following four days.

Derivatives positioning

• Capital outflows continue in crypto futures. The total industry-wide notional open interest has dropped by 1.5% to $93 billion within 24 hours, marking new multi-month lows.
• Exchanges have liquidated leveraged positions totaling $229 billion over the past 24 hours, with most of these being long positions (bullish bets).
• Open interest in DOGE futures has decreased by 4%, leading the trend across most major tokens. PEPE, LINK, and AVAX have also experienced declines in open interest ranging from 3% to 5%.
• Open interest for HYPE futures, a recent outperformer, has fallen to 44.45 million HYPE, the lowest level since early December, likely indicating profit-taking after the token outperformed Bitcoin and other major cryptocurrencies during the recent downturn.
• The market’s anxiety has subsided, as reflected by the significant decline in the implied volatility indices for Bitcoin and Ether from their monthly peaks.
• On Deribit, puts for Bitcoin and Ether remain more expensive than calls, suggesting ongoing concerns about downside risks; however, the current positioning is less defensive compared to two weeks ago.

Token discussion

• Altcoins continue to follow Bitcoin, as the “Bitcoin dominance” metric has fluctuated between 57.4% and 60.1% since September.
• In the last week, the AI token MORPHO has risen by 23.5%, while the privacy coin Zcash ZEC$283.82 has increased by 19% in the same timeframe.
• On the other hand, the layer 1 blockchain token Layer Zero (ZRO) has experienced a 16% decline over the past week, losing momentum following its announcement of a partnership with Citadel Securities and DTCC.
• The relative weakness of several altcoins remains apparent on shorter time frames, with tokens such as HYPE, SUI, and ASTER all recording losses ranging from 3% to 4.8% since midnight UTC as the cryptocurrency market looks for a bullish catalyst.