Crypto Market: Stocks Rally on US Shutdown Deal As Crypto Prices Stay on the Sidelines

Key Insights

• Stocks gained on hopes of a shutdown deal, but the crypto market stayed quiet.
• Bitcoin and stocks are now moving in opposite directions.
• More short trades and weak buying show that traders are still careful on the crypto prices.

Stocks moved higher after news that the U.S. government shutdown could end soon. The S&P 500 rose about 0.6%, and the Nasdaq was up nearly 1%.

The plan could reopen government offices by January, which made the US stock traders feel safer to buy again.

But the crypto market did not move the same way. At press time, Bitcoin was trading near $105,700, still lower than last month’s level.

Even with good news from Washington, most crypto prices changed very little. Money entering the market stayed weak, showing that traders were not ready to buy yet. Let us understand why!

Crypto Market Activity Still Very Low

The crypto market has stayed slow for several days. On-chain data showed that more coins were leaving exchanges than coming in.

That means traders were moving their tokens to wallets, not using them to trade.

While this is usually a good sign, hinting at storage and not selling, the netflow is still not bullish enough to drive optimism for the crypto prices.

Plus, even the U.S. government shutdown sentiment isn’t reflecting across the derivatives market.  On Binance, traders who expected the crypto prices to fall controlled about $3.73 billion in short trades.

Those who expected prices to rise had about $1.72 billion in long trades. So most traders were waiting for prices to drop again.

This makes the crypto market more likely to fall, but it can also cause a quick jump if prices rise suddenly.

That kind of move, called a short squeeze, happens when short traders rush to buy back to avoid losses.

Right now, that has not started yet. Crypto prices are still moving slowly, waiting for stronger buying.

Bitcoin and Stocks Moving Differently Now

Earlier this year, Bitcoin often moved the same way as U.S. stocks. When stocks went up, Bitcoin went up too.

But now things have changed. The 30-day correlation between Bitcoin and the S&P 500 is around −0.024. A negative number means they are moving in opposite directions.

So, while stocks are rising, Bitcoin is not following. This shows that the crypto market is not reacting to stock gains anymore.

Traders care more about how much new money is coming in than about good news from the stock market. Until that money returns, crypto prices may stay quiet even when stocks rise.

Additionally, data from futures and spot markets shows traders are still nervous. Short trades are higher than long ones, as mentioned earlier. This means more people think prices will fall.

Spot trading, which happens without borrowing money, also stayed small. That’s evident as exchange outflows are in red, but the pillars are not towering enough like in mid-October.

When both numbers stay low, it means most traders prefer to wait and watch. They are worried about losing money if prices move the wrong way.

Until large buyers come back, the crypto market will likely stay slow. However, because there are so many short trades, a sudden rise could surprise sellers.

Caution May Last Until More Money Enters the Crypto Market

The U.S. government shutdown might end soon, but the quiet period for digital assets is still here. For the crypto market to recover, new money needs to flow into exchanges.

Traders also want clear signs that borrowing will become cheaper, which would help crypto prices rise again.

The crypto market is calm but weak. As long as many traders keep expecting prices to fall and few new buyers appear, a strong recovery is hard.

Once fresh money starts to enter, crypto could finally wake up from its own “shutdown.”