Market commentary
Over the weekend, bitcoin and the crypto markets experienced a sharp crash, leading to the largest liquidation cascade in history. Over $2.3 billion in leveraged crypto positions were forcibly wiped within a single day. While the bitcoin price is down only -12% from recent highs, alternative cryptocurrencies like Ethereum temporarily lost up to -30%.
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Market uncertainty leads to correction
Following Trump's election victory in November 2024, crypto markets surged. The new US president promised to end Operation Choke Point 2.0, realign the SEC, deregulate the crypto sector, and establish a strategic bitcoin reserve. Traders priced in these expectations ahead of his inauguration. Bitcoin shot up from $67,000 to $108,000. Now, we are witnessing the classic "sell the news" pullback.
Bitcoin BTC/USD (daily) / Charts: TradingView
Political unrest in the Middle East, the outbreak of a trade war involving the United States, and restrictive signals from the Federal Reserve further pressured prices. This resulted in a significant cascade of liquidated leveraged positions. Over $2.3 billion was liquidated, with Ethereum positions being hit harder than bitcoin. ETH briefly traded at $2,100 - a price last seen in December 2023, apart from a temporary liquidation event.
24h crypto liquidations by crypto asset / Source: Coinglass
Altcoins suffer disproportionately
It wasn’t just Ethereum that struggled during the correction. The entire altcoin market plunged by -28% since the highs of last December. Alternative cryptocurrencies have yet to break the all-time high from 2021 in a sustainable manner. As a result, the current crypto cycle remains heavily dominated by bitcoin. The digital gold now accounts for 61% of the total cryptocurrency market capitalization - the highest bitcoin dominance since March 2021.
Total crypto market capitalization excluding bitcoin / Charts: TradingView
How the crypto markets will develop following this crash remains to be seen. Historically, extreme liquidation cascades have often marked local lows. Volatility is likely to be followed by a consolidation phase. From a fundamental perspective, however, the favorable regulatory environment in the United States and growing institutional crypto adoption support the continuation of the uptrend.
Haftungsausschluss
Alle Angaben in dieser Publikation erfolgen ausschliesslich zu allgemeinen Informationszwecken. Die in dieser Publikation zur Verfügung gestellten Informationen stellen keine Anlageberatung dar und sind auch nicht als solche beabsichtigt. Diese Publikation stellt kein Angebot und keine Empfehlung oder Aufforderung für eine Anlage in ein Finanzinstrument einschliesslich Kryptowährungen und dergleichen dar und ist auch nicht als Angebot, Empfehlung oder Aufforderung beabsichtigt. Die in der Publikation enthaltenen Inhalte stellen die persönliche Meinung der jeweiligen Autoren dar und sind nicht als Entscheidungsgrundlage geeignet oder beabsichtigt.
Risikohinweis
Anlagen und Investitionen, insbesondere in Kryptowährungen, sind grundsätzlich mit Risiko verbunden. Der Totalverlust des eingesetzten Kapitals kann nicht ausgeschlossen werden. Kryptowährungen sind sehr volatil und können daher in kurzer Zeit extremen Kursschwanken ausgesetzt sein.
