Degen Digest: April 25, 2025
Analysis of Bitcoin's decoupling from NASDAQ and surge to $94K, plus why shorting low-cap altcoins can be disastrous for traders.
Apr 25, 2025
Table of Contents
- TL;DR
- Bitcoin Surges to $94K: New Bull Run?
- The Low Cap Altcoin Shorting Trap
- Market Structure and Trading Strategies
- Conclusions & Market Outlook
TL;DR
- Bitcoin has surged to $94K while decoupling from NASDAQ, potentially signaling a new bull run phase
- A notable correlation with gold has emerged as BTC is increasingly being recognized as "digital gold"
- BTC is at a crucial price level that could determine whether it breaks through to $100K or retraces to $70K
- Shorting low-cap altcoins has proven extremely dangerous, with multiple tokens experiencing massive short squeezes
- Exchange manipulation of funding rates (particularly on Binance) appears to be favoring market makers with long positions
Bitcoin Surges to $94K: The Bull Run We’ve Been Waiting For?
In recent days, a fascinating market development has emerged: Bitcoin's correlation with NASDAQ has significantly decreased. We're witnessing a rare phenomenon where NASDAQ declines while Bitcoin rises. During the recent downturn triggered by trade war tensions, the correlation between the two had been strengthening, but now Bitcoin has broken free with a dramatic surge.
The Decoupling from NASDAQ
The decoupling represents a potentially significant shift in market dynamics. As shown in the chart, while NASDAQ experienced a notable decline (approximately -13.1%), Bitcoin managed to recover and show positive growth (-3.0%), breaking away from the previous pattern where both moved in tandem.
This divergence is particularly notable given the broader macroeconomic concerns around trade tensions and market cycles. For crypto traders, this could signal Bitcoin's maturing status as an independent asset class.
Gold Correlation Emerging
Alongside the dollar's recent weakness, gold has attracted substantial investment flows, breaking historical records and reaching $3,500 per ounce. As Bitcoin's correlation with NASDAQ decreases, its relationship with gold has become more pronounced. This has fueled optimism that people are finally beginning to view Bitcoin as "digital gold" - a narrative that has long been anticipated in the crypto community.
With gold's market capitalization reaching $22T and experiencing profit-taking after hitting all-time highs, some of this capital may be flowing into Bitcoin as a "beta play" on gold, driving short-term price movements within the current range. Meanwhile, the US-China trade tensions appear to be settling in for the long term, with both sides preparing for an extended dispute.
Critical Price Levels
The current price level is critically important, as a definitive direction could trigger either a dramatic rise or fall. If Bitcoin breaks through $95K with substantial trading volume in the near future, reaching $100K again and moving toward new all-time highs would not be difficult. This could resemble the rally pattern we saw in November of last year.
Key price points to watch:
- $95K: Immediate resistance with high volume needed for confirmation
- $100K: Psychological resistance level
- $70K: Critical support level if current momentum fails
However, if the upward trend reverses and Bitcoin returns to its previous range, we could quickly see a return to the $70K level. The current weekly chart pattern bears similarities to the bearish market of early 2022, which is cause for caution.
The Low Cap Altcoin Shorting Trap
Case Study: ALPACA's 3X Surge After Delisting
Yesterday, immediately after Binance announced ALPACA's delisting, the price surged more than 3X from its lowest point of $0.024 to $0.085 in just two hours. How was this possible?
First, the price immediately dropped by 30% following the delisting announcement. At this point, ALPACA's market cap was only $3.6M. After witnessing several tokens drop to around $1M market cap following delistings in recent months, some aggressive traders entered short positions without even considering the market capitalization.
After the delisting announcement, open interest began to surge rapidly. Previous delisting announcements had almost guaranteed profits for short positions, so traders continued to increase their shorts as the price rebounded, expecting the usual pattern.
However, a small number of whale traders took the opposite approach and built long positions. They recognized the token's extremely low market cap and the rapidly increasing short open interest. With such a small market cap, these whales could directly purchase the token in the spot market to drive up the price and force short positions to liquidate, maximizing their own profits.
The result was a complete liquidation of all short positions, with liquidations showing shorts worth $523,927 and $592,062 being wiped out.
Recent Low Cap Manipulation Patterns
Recently, low market cap altcoins like $VOXEL, $MAGIC, and $ZEREBRO have experienced price increases of several hundred percent. After months of market conditions favoring short traders, many took bold short positions on these heavily manipulated tokens, resulting in rapid price surges.
Market makers, having observed the depressing altcoin market conditions for months and understanding trader psychology better than anyone, likely planned these mega pumps to coincide with Bitcoin's rebound, creating the perfect environment for short squeezes.
Exchange Funding Rate Manipulation
Binance modified the funding rate collection time for surging altcoins from every 4 hours to every 2 hours, and in the case of $VOXEL, to every hour. This clearly benefited market makers with long positions. During its rise, $VOXEL consistently maintained a -2% funding rate, meaning long position holders received approximately 48% (24 hours × 2%) of their position size daily just from funding fees.
This unprecedented adjustment to hourly funding rate collection is reminiscent of FTX's practices before its collapse – a concerning pattern for market transparency.
Market Structure and Trading Strategies
The market structure currently reveals sophisticated manipulation tactics that have caught many experienced traders off guard. For those navigating these complex waters, risk management strategies have become more critical than ever.
Warning signs of potential short squeezes:
- Open interest exceeding market capitalization
- Extremely low market cap tokens (below $5M)
- Unusual exchange behavior (funding rate adjustments)
- Delisting announcements creating seemingly obvious short opportunities
These conditions create perfect environments for short squeezes orchestrated by whale traders and market makers who understand and exploit trader psychology. The ALPACA case study demonstrates how dangerous it can be to short tokens based solely on historical patterns without considering market capitalization and open interest ratios.
Conclusions & Market Outlook
- Bitcoin stands at a crucial threshold – once its direction is established, expect explosive movement either upward or downward. The decreasing correlation with traditional markets and increasing relationship with gold could signal a fundamental shift in how Bitcoin is perceived.
- Avoid shorting low cap altcoins, especially those where open interest exceeds market capitalization – this has proven to be an extremely dangerous strategy in the current market environment.
- Exchange mechanics are increasingly favoring market makers – the manipulation of funding rates shows exchanges are willing to adjust their mechanisms to benefit certain market participants, often at the expense of retail traders.
The coming weeks will be critical for determining Bitcoin's trajectory through the remainder of 2025. If the gold correlation strengthens and Bitcoin breaks above $95K with convincing volume, the path to new all-time highs becomes increasingly probable.
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