Is Bitcoin’s [BTC] growing negative correlation to other risk assets becoming a key headwind?
It has been less than 48 hours since the most recent crypto wipeout resulted in over $1 billion in liquidations, pushing Bitcoin close to $70k, and sending market sentiment into extreme fear. While Bitcoin continues to trade below $75k, the S&P500 has risen by over 2%, pointing to stronger resilience despite the ongoing FUD.
This growing disparity raises questions about Bitcoin’s performance as a macro hedge this cycle. Notably, Peter Schiff shares his view. As his post below highlights, the long-time Bitcoin critic has warned of a deeper BTC correction, citing its underperformance compared to other risk assets. Even precious metals such as gold and silver have gained over 2%, further widening the performance gap.
Against this backdrop, positioning for further downside is starting to make more sense.
According to CoinGlass data, Bitcoin’s long/short ratio is showing bearish signs as it fell back from a 3-month high of 1.4 on the 7th of November, indicating traders are returning to shorting their positions, signaling weaker confidence in BTC’s near-term recovery. The key takeaway? There is no downside liquidity left to be hunted. The recent $1 billion liquidation event has wiped out almost all long-side liquidity.
This can be considered a great chance for bulls to recover. If Bitcoin remains above $75k and accumulation continues, then both early and late short positions could come under pressure. In fact, one analyst highlighted over $11 billion in short liquidity clustered around $87k.
Interestingly, bulls already seem to be positioning for this potential move.
Bitcoin’s post-liquidation setup points to a possible shift in sentiment
Despite the scale of the recent wipeout, market sentiment is already showing signs of recovery.
The Crypto Fear & Greed Index shows that sentiment has improved by four points to 32. This indicates that selling pressure may be losing steam and that confidence is returning. Notably, institutional activity is also adding to this shift. As on-chain data reported, MSTR recently bought an additional 1,036 BTC.
To add to this, MARA Holdings has announced a Q3 net profit of $634.4 million, up from $123.1 million in the previous year. This is backed up by Santiment data showing a distinct increase in accumulation between retail and mid-sized holders. In the past two weeks the market has seen an increase of 1-10 BTC wallets by 10,076 BTC and 10-100 BTC wallets by 4,131 BTC.
In short, just because BTC has failed to outperform other assets does not mean that the rally is dying.
Despite macro uncertainty and bearish positioning being a key factor, there are clear signs of increasing institutional exposure and accumulation across wallet classes. If Bitcoin can hold above $75k, the current divergence could turn into a potential bear trap, with the $87k short-liquidity cluster becoming the next major upside target.
Final Summary
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Bitcoin is lagging traditional markets, but institutional buying and whale accumulation remain strong.
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If Bitcoin holds $75k, a short squeeze could push prices toward $87k.