Market commentary
Just under a month ago, Bitcoin hit a new all-time high of $73,000 after a breathtaking rally since the approval of the spot Bitcoin ETFs. So far, $12.53 billion in net inflows through the products have pushed the price higher. Over the past few weeks, the market has gradually calmed down. Bitcoin entered a consolidation phase as investors shifted their focus further along the risk curve to altcoins.
A headline about an attack by Iran on Israel led to a drop back to the previous all-time high of around $60,000. Bitcoin corrected about -17%. Impatient derivatives traders suffered heavy losses. Over $600 million in Bitcoin positions have been liquidated in the past few days. Meanwhile, BTC has recovered slightly. It seems that crypto traders overestimated the conflict between Iran and Israel.
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Altcoin Markets Suffer Flash Crash
Alternative cryptocurrencies ("altcoins") often react more strongly to moments of panic. Less liquidity leads to more aggressive corrections. This pattern was once again evident over the weekend. While Bitcoin's correction stayed within a typical range for uptrends, certain altcoins experienced outright flash crashes. For example, the fifth largest cryptocurrency by market cap, Solana (SOL), hit a low of $116 on the most liquid trading pair. Just two weeks ago, the currency was trading above $200.
Other altcoins corrected even deeper. In fact, the liquidation of altcoins far exceeded the forced liquidation of Bitcoin derivatives. Within 48 hours, $1.16 billion in liquidations hit altcoins, compared to $387 million in Bitcoin. The result: the largest wipeout of altcoin derivatives open interest (OI) in history. Over $22 billion in crypto positions were liquidated. This represented 40% of the open interest in altcoins.
The market has since stabilized. A large portion of the affected altcoins have moved off their temporary lows. Now, it remains to be seen if Bitcoin will start a new rally with this week's planned halving.
Disclaimer
All information in this publication is provided for general information purposes only. The information provided in this publication does not constitute investment advice and is not intended as such. This publication does not constitute and is not intended as an offer, recommendation or solicitation to invest in any financial instrument, including cryptocurrencies and the like. The contents contained in the publication represent the personal opinions of the respective authors and are not suitable or intended as a basis for decision-making.
Risk notice
Investing in cryptocurrencies, is fundamentally associated with risk. The total loss of the invested capital cannot be excluded. Cryptocurrencies are very volatile and can therefore be exposed to extreme price fluctuations in a short period of time.
