Market sees $12.5 billion in open interest vanish over three days amid Bitcoin volatility.
Bitcoin’s recent price crash has been notably influenced by futures contract liquidations, according to the “Bitfinex Alpha” report. Over the past month, Bitcoin (BTC) has oscillated between $71,300 and $63,500, with a significant crash on April 12 leading to over $1.8 billion in liquidations amid geopolitical tensions.
According to Bitfinex’s analysts, these market movements are not isolated incidents, as similar patterns have been observed previously, where dips below the range low were met with a swift recovery. Yet, this time, the market’s response may be more subdued, as indicated by current spot flows into Bitcoin.
The concept of “time capitulation” is at play here, where leveraged traders face capital erosion through stop-losses and liquidations, while large holders potentially engage in distribution or accumulation.
The introduction of new supply to the market is a critical factor. If absorbed, it could propel Bitcoin out of its current range. However, the high volume of market participants exiting leveraged positions is contributing to a healthier market ecosystem with minimal funding rates.
The past few days have seen daily liquidations comparable to those on March 5th, which brought significant volatility and a 14.5% intra-day price swing for Bitcoin. Despite a smaller 8.5% intra-day movement on the recent Friday, liquidations reached similar levels across major exchanges. Saturday’s liquidations were among the largest in the asset class’s history, with a 12% intra-day fluctuation.
An interesting development during this correction is the neutralization of funding rates. These rates are crucial in aligning the price of perpetual futures contracts with the actual spot market price. The recent trend towards neutral or even negative funding rates across various altcoins suggests a healthier market correction and potentially reduced volatility ahead.
In line with the reduction of leveraged positions, the overall market saw a significant decrease in open interest, with approximately $12.5 billion vanishing over three days. This shift brought the total cryptocurrency market’s open interest down to $35.4 billion by Saturday, a stark contrast to the $48 billion peak just days prior.
The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
Crypto Briefing may augment articles with AI-generated content created by Crypto Briefing’s own proprietary AI platform. We use AI as a tool to deliver fast, valuable and actionable information without losing the insight – and oversight – of experienced crypto natives. All AI augmented content is carefully reviewed, including for factural accuracy, by our editors and writers, and always draws from multiple primary and secondary sources when available to create our stories and articles.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
See full terms and conditions.
>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : CryptoBriefing – https://cryptobriefing.com/bitcoin-futures-liquidation-impact/