Bitcoin News Today: Investors Flock to Privacy Coins as Major Cryptocurrencies Plunge

Bitcoin (BTC) and the broader cryptocurrency market endured a volatile stretch this week, with the leading digital asset trading near $96,000 after a sharp decline from its recent highs. Meanwhile, Zcash (ZEC) continued its rollercoaster ride, falling 5.67% to $485.84 as the total crypto market cap dipped to $3.373 trillion-a 5.4% drop in 24 hours-amid renewed risk reassessment by traders. The sell-off reflected a combination of macroeconomic uncertainty, thin liquidity, and evolving investor sentiment, with privacy tokens outperforming major cryptocurrencies in a fragmented market according to market analysis.

The market's consolidation phase saw Bitcoin and Ethereum (ETH) retreat modestly, with BTC down 4.33% to $97,532 and ETH sliding 8.98% to $3,164. Smaller tokens like Solana (SOL), BNB, and ZEC also faltered, with SOL and BNB each losing over 5%.

In contrast, privacy-focused assets such as Decred (DCR), Dash (DASH), and Monero (XMR) bucked the trend, rising 22%, 4.5%, and 3.4%, respectively, as investors sought refuge in less-correlated assets. The divergence underscored a broader trend of market segmentation, with derivatives data showing mixed positioning: open interest grew for tokens like HYPE and BCH, while ETH and XRP saw declines according to market data.

Market sentiment remained bearish, with the Fear and Greed Index sinking to 26/100-a level historically associated with rebounds after periods of extreme fear. Traders pointed to elevated volatility metrics, such as Volmex's BVIV index hovering near 50%, as a warning sign of potential turbulence. The U.S. government shutdown, now in its final stages, added another layer of uncertainty, with analysts speculating that policy developments could influence near-term price action according to market analysis.

Derivatives activity highlighted the market's precarious balance. Annualized funding rates for BTC and ETH futures remained below 2025 averages, signaling subdued leverage demand and risk appetite. Meanwhile, options data revealed bearish positioning, with traders buying BTC put spreads and ether call options across a wide strike range according to market data. The CME's three-month basis for SOL futures hit a 7% discount-the lowest since July-aligning with BTC and ETH's premiums and reflecting divergent liquidity dynamics according to market analysis.

Despite the downturn, some analysts see a catalyst-driven rebound on the horizon. The market's relative strength index (RSI) at 51.26/100 suggests it's neither overbought nor oversold, leaving room for a surge if macroeconomic clarity or positive news emerges. However, thin liquidity and leveraged positions remain risks, with traders warning that even minor catalysts could trigger sharp swings according to market analysis.