The first month of 2022 has been turning merciless for the crypto business, as the market continues to fall off from the cliffs. Digital assets from the crypto directory have shedded more gains than the previous. Wherefore, the market cap of the industry now hovers around $1.64 Trillion, bearing a loss of 10.17% over the last day.
The prolonged corrections in the cryptosphere have dragged the valuation from the stratosphere of $3 T to present levels, i.e a loss of over $1.3 T. In the interim, traders from the futures market have been liquidating their positions, as a result metrics revolving around the futures market have been bearish. On the flip side, folks from the spot markets have been panic selling, as the business trembles in fear.
Are Traders From The Future Market Packing Their Bags?
According to substantial sources, the estimated leveraged ratio is relatively high by 0.21. whereas, the open interest has decreased about $2.83 B in the perpetual market. In addition, the funding rate has been negative for 8-hours prior to showing signs of relief. On the other hand, traders have liquidated $372 M in long positions in the perpetual market. The volume of Bitcoin futures has also dropped below $1 T
The futures market has been imperative in the spot market’s price trend, the aforementioned metrics play a pivotal role in the business. A plunge in both price and open interest signals liquidation by traders by long positions, which propels the bears. Until open interest finds support, and traders settle with their liquidations, bears would continue to live in the space.
The source also sheds light on the 3 key data changes prior to BTC’s drop, which are exchange whale Ratios were very high, the top 10 hourly deposits in each exchange took 90% of total inflows.
In addition, long-term holder SOPR witnessed a spike, meaning some of the long-term holders tried to sell BTC.
Moreover, the Coinbase Premium Index fluctuated, possibly signaling that the selling pressure mostly came from U.S. institutional investors. BTC’s price crashed alongside S&P 500 and NASDAQ-100. In addition, as previously reported by CoinPedia, the FED’s moves have been playing around with economic markets.
What Do We Learn From Historic Events?
The crypto market is not new to liquidations from traders of the futures markets, the business has evolved over major liquidations in the past. Liquidations occur when traders are not able to fulfill margin requirements for holding long or short positions, which leads to the market exacerbating.
Previously on the 18th of April, we had come across exchanges offering crypto futures suffering liquidations totaling $10 B worth of positions. Prior to which on the 23rd of February $5.77 B worth of liquidations were recorded. Post the crash in April/May, BTC started rebounding in July, and it was in October when a bull run to ATH was spectated. Consecutively, we can now look forward to BTC running towards the ATH by mid-year.
Summing up, the crypto market with growing age has spread its wings to the bigger economic world. While long liquidations are a major concern, we can expect the business to find support prior to its sentimentally strong support at $30,000. As major institutions have been buying huge portions in the dip. That said, finding positions at current levels could arguably be the apt move for a bull run in the future.