Bitcoin’s Brief Rally Fades as Long-Term Sentiment Turns Bearish; DOGE, XRP, and SOL Follow

Bitcoin’s late Wednesday surge to $144,700 was short-lived, as a key indicator of long-term market sentiment turned bearish for the first time since June 2023. Alongside bitcoin, Dogecoin (DOGE), XRP, and Solana (SOL) also showed weakness, while ether (ETH) demonstrated more resilience.

Despite the mixed signals, the CoinDesk 20 Index rose about 0.7% over 24 hours, and the broader CoinDesk 80 Index gained 0.4% at press time. Analysts remain cautiously optimistic about bitcoin’s long-term outlook.

“Donald Trump’s approval of crypto assets being included in 401(k) retirement plans adds a structural support layer,” said Jag Kooner, head of derivatives at Bitfinex. “Though it will take time to impact the market, this shift could move capital from speculative trading toward strategic, pension-style allocations, embedding crypto more deeply into U.S. capital markets.”

Derivatives and Market Positioning

Open interest in bitcoin and ether futures stalled at elevated levels—over 700,000 BTC and 14.2 million ETH respectively—reflecting a lack of clear direction ahead of the central bankers’ Jackson Hole symposium.

LINK futures maintained near-record open interest, with prices climbing to nearly $27—the highest since January. Other top-10 tokens, except BNB, experienced declines in open interest over the past 24 hours.

HYPE leads the majors with annualized funding rates above 25%, signaling strong bullish demand.

On CME, bitcoin futures saw their recent recovery stall, with the three-month premium dropping to about 7%. In contrast, ether futures open interest continues to grow, approaching 2 million ETH, suggesting rising institutional preference for ether over bitcoin.

At Deribit, the 180-day bitcoin options skew dropped to -0.42, the strongest indication since June 2023 that traders are buying put options (downside protection). Longer-term ether options still favor call options.

Over-the-counter flows via Paradigm showed demand for bitcoin puts funded by call selling, with mixed activity in ether options.

Volatility indices remained steady, with bitcoin’s seven-day implied volatility around 36% and ether’s near 70%, indicating no anticipated major market swings from the Jackson Hole event.

Token Spotlight: Ye’s YZY Memecoin

YZY Money, a Solana-based memecoin linked to Ye (formerly Kanye West), launched Thursday with a staggering 6,800% price surge before slipping below $1. The token’s announcement on Ye’s X account initially sparked hack fears, but was followed by a video—possibly AI-generated—showing Ye discussing the launch.

The token’s distribution mimics the TRUMP coin structure: 70% allocated to Ye, 10% to liquidity, and 20% for public sale. Insiders reveal Ye originally sought an 80% share before settling at 70%.

On-chain data reveals early insider trading: wallet 6MNWV8 bought 450,611 USDC worth at $0.35, later selling part of its holdings for $1.39 million, netting a $1.5 million profit including unrealized gains. Another whale invested $2.28 million and now holds about $6 million in gains.

Liquidity was seeded single-sided with only YZY tokens, enabling developers or large holders to remove liquidity at will—a design criticized for its similarity to Argentina’s controversial LIBRA token.

Retail investors bore the brunt of losses; one wallet lost nearly $500,000 within two hours after buying at $1.56 and selling at $1.06. The episode highlights how insider-heavy allocations and liquidity mechanics can expose traders, despite hype pushing YZY’s market cap near $3 billion briefly.

Stargate Acquisition Battle Heats Up

Wormhole has challenged LayerZero’s $110 million bid to acquire Stargate, proposing a higher counteroffer and requesting a five-day delay of the governance vote to allow token holders adequate time for evaluation.

Stargate’s scale is impressive: it processed $4 billion in July, holds $345 million in total value locked, and maintains a treasury with $92 million in stablecoins and ether, plus $55 million in STG and other assets.

LayerZero’s offer includes control of the treasury and future revenue streams but has faced criticism for undervaluing Stargate and shortchanging token holders.

Wormhole argues that STG holders “deserve a more competitive process” and believes its bid offers greater long-term value.

A Wormhole-Stargate merger would combine Stargate’s unified liquidity pools with Wormhole’s broad blockchain integrations, creating one of the largest cross-chain hubs in crypto.

The Wormhole Foundation says this combination would “unlock unrealized value” and deliver immediate and lasting benefits to STG and Wormhole token holders alike.