AI mania is helping cap crypto's upside, Wintermute says

By Francisco Rodrigues (All times ET unless indicated otherwise)

Bitcoin $BTC$68,689.78 slipped to $68,500 on Tuesday, having failed to reclaim $70,000 after trading above that level for a while over the weekend. The CoinDesk 20 Index (CD20) dropped 0.23% over the past 24 hours.

The market appears to be stabilizing after last week’s decline to $60,000, which erased all the cryptocurrency’s gains since Donald Trump’s presidential election victory in November 2024.

The slide prompted over $2.7 billion in liquidations, flushing out leveraged positions. It may not, however, have reflected a fundamental change in the crypto market. Rather, it might have been tied to declining liquidity in the broader financial ecosystem.

Raoul Pal, CEO of Global Macro Investor, said last week's selloff across crypto and tech stocks stemmed from temporary drains in U.S. dollar liquidity tied to Treasury operations and government funding dynamics.

And then there's artificial intelligence (AI). Investments in that technology have been “absorbing available capital for months at the expense of everything else,” Wintermute wrote in a note. The trading firm wrote that stripping AI companies from the Nasdaq 100 index sees crypto’s negative skew nearly disappear.

“The underperformance during rallies and amplified selling during drops is almost entirely explained by AI rotation,” Wintermute OTC trader Jasper De Maere wrote. “For crypto to outperform again, air needs to come out of the AI trade.”

Elsewhere, Japanese government bond yields, which rose after Prime Minister Sanae Takaichi’s decisive election victory at the weekend, are dropping. That could avoid further unwinding of the yen carry trade, which might have seen up to $5 trillion invested overseas moving back to the country.

Arthur Hayes, a co-founder of crypto exchange BitMEX, pointed to Takaichi’s victory as a potential catalyst for the yen to lose value against the dollar, making the Japanese currency a less attractive investment. That could be a boon for risk assets, including cryptocurrencies.

Still, prices are likely to remain rangebound for the time being. The Coinbase Premium Index, which measures demand from large U.S. investors on the exchange, remains negative, and spot bitcoin ETF flows also show hesitation, with daily net inflows coming in at just $145 million yesterday.

“While retail spreads attention across other asset classes, institutional flows through ETFs and derivatives now seem to dictate direction,” Wintermute wrote. Stay alert!

Read more: For analysis of today's activity in altcoins and derivatives, see Crypto Markets Today

What to Watch

For a more comprehensive list of events this week, see CoinDesk's "Crypto Week Ahead".

• Crypto
  • Feb. 10: Mantle to host Mantle State of Mind Ep. 06 live from Consensus HK.
• Macro
  • Feb. 10, 7 a.m.: Brazil inflation rate YoY (Prev. 4.26%), MoM (Prev. 0.33%)
  • Feb. 10, 8:30 a.m.: U.S. retail sales MoM for December Est. 0.5% (Prev. 0.6%)
  • Feb. 10 8:30 a.m.: U.S. employment cost index QoQ (Prev. 0.8%)
  • Feb. 10, 2 p.m.: Argentina inflation rate YoY (Prev. 31.5%), MoM (Prev. 2.8%)
• Earnings (Estimates based on FactSet data)
  • Feb. 10: Canaan (CAN), pre-market, -$0.03
  • Feb. 10: Robinhood Markets (HOOD), post-market, $0.63
  • Feb. 10: Upexi (UPXI), post-market, -$0.07
  • Feb. 10: Lite Strategy (LITS), post-market

Token Events

For a more comprehensive list of events this week, see CoinDesk's "Crypto Week Ahead".

• Governance votes & calls
  • Feb. 10: Solana to host an X Spaces session with SushiSwap's CEO.
• Unlocks
  • Feb. 10: Aptos APT$0.9962 to unlock 0.69% of its circulating supply worth $12.07 million.
• Token Launches
  • Feb. 10: Venice (VVV) token emissions to drop from 8 million to 6 million per year.

Conferences

For a more comprehensive list of events this week, see CoinDesk's "Crypto Week Ahead".

• Day 1 of 3: Consensus Hong Kong
• Day 1 of 3: Solana Breakout (Online)

Market Movements

• $BTC is down 1.9% from 4 p.m. ET Monday at $69,041.32 (24hrs: -0.06%)
• $ETH is down 4.94% at $2,016.57 (24hrs: -0.8%)
• CoinDesk 20 is down 2.59% at 3,086.55 (24hrs: +0.43%)
• Ether CESR Composite Staking Rate is up 7 bps at 2.82%
• $BTC funding rate is at -0.006% (-6.6247% annualized) on Binance

• DXY is unchanged at 96.83
• Gold futures are unchanged at $5,077.00
• Silver futures are down 0.43% at $81.88
• Nikkei 225 closed up 2.28% at 57,650.54
• Hang Seng closed up 0.58% at 27,183.15
• FTSE is down 0.38% at 10,346.98
• Euro Stoxx 50 is unchanged at 6,060.67
• DJIA closed on Monday unchanged at 50,135.87
• S&P 500 closed up 0.47% at 6,964.82
• Nasdaq Composite closed up 0.90% at 23,238.67
• S&P/TSX Composite closed up 1.7% at 33,023.32
• S&P 40 Latin America closed up 1.97% at 3,767.79
• U.S. 10-Year Treasury rate is down 1.4 bps at 4.184%
• E-mini S&P 500 futures are up 0.09% at 6,989.25
• E-mini Nasdaq-100 futures are unchanged at 25,359.00
• E-mini Dow Jones Industrial Average Index futures are unchanged at 50,260.00

Bitcoin Stats

• $BTC Dominance: 59.27% (+0.05%)
• Ether-bitcoin ratio: 0.02921 (-2.66%)
• Hashrate (seven-day moving average): 1,005 EH/s
• Hashprice (spot): $34.72
• Total fees: 2.92 $BTC / $204,792
• CME Futures Open Interest: 118,215 $BTC
• $BTC priced in gold: 13.6 oz.
• $BTC vs gold market cap: 4.6%

Technical Analysis

• The ratio of altcoins (excluding Top 10) to $BTC weekly chart continues to maintain its core support, suggesting the broader altcoin market did not experience an extreme selloff during the bitcoin's recent slide.
• The weekly RSI has been climbing, indicating some momentum in altcoins relative to $BTC.
• There's no clear breakout at the moment, but it's worth keeping an eye on.

Crypto Equities

• Coinbase Global (COIN): closed on Monday at $167.25 (+1.29%), -1.44% at $164.84 in pre-market
• Circle Internet (CRCL): closed at $60.10 (+5.36%), -1.31% at $59.31
• Galaxy Digital (GLXY): closed at $21.15 (+7.03%), +0.61% at $21.28
• Bullish (BLSH): closed at $32.05 (+16.76%), unchanged in pre-market
• MARA Holdings (MARA): closed at $8.06 (-2.18%), -1.49% at $7.94
• Riot Platforms (RIOT): closed at $14.97 (+3.60%), -1.27% at $14.78
• Core Scientific (CORZ): closed at $18.55 (+10.35%)
• CleanSpark (CLSK): closed at $10.19 (+1.09%), -1.77% at $10.01
• CoinShares Valkyrie Bitcoin Miners ETF (WGMI): closed at $43.83 (+8.41%)
• Exodus Movement (EXOD): closed at $10.74 (+1.70%)

Crypto Treasury Companies

• Strategy (MSTR): closed at $138.44 (+2.6%), -2.61% at $134.82
• Strive (ASST): closed at $10.15 (-14.86%), +1.03% at $10.25
• SharpLink Gaming (SBET): closed at $7.11 (+1.14%), -0.7% at $7.06
• Upexi (UPXI): closed at $1.05 (-7.89%), +2.86% at $1.08
• Lite Strategy (LITS): closed at $1.05 (-0.94%), -2.86% at $1.02

ETF Flows

Spot $BTC ETFs

• Daily net flows: $144.9 million
• Cumulative net flows: $54.82 billion
• Total $BTC holdings ~1.27 million

Spot $ETH ETFs

• Daily net flows: $57 million
• Cumulative net flows: $11.9 billion
• Total $ETH holdings ~5.8 million

Source: Farside Investors

While You Were Sleeping

• U.S. bitcoin ETFs register back-to-back inflows for first time in a month(CoinDesk): According to SoSo value data, the consecutive inflows began on Friday with $471.1 million in fresh capital, followed by $144.9 million on Monday.
• Bitcoin’s U.S. demand signal flickers back after crash (CoinDesk): A rebound in the Coinbase Bitcoin Premium Index suggests U.S. buyers stepped in near recent lows, though it does not confirm a broader risk-on turn.
• Stocks rise as Nikkei sets record, dollar drops (Reuters): Global stocks advanced in Asian trade on Tuesday, led by an extended rally in Tokyo's benchmark after Japanese Prime Minister Sanae Takaichi's decisive election victory over the weekend.
• Stocks push higher as traders wait for data deluge (Bloomberg): A rally that drove the S&P 500 to within a whisker of an all-time high is extending modestly as traders gear up for a slate of US economic readings, starting with retail sales on Tuesday.