A significant portion of the positions of Bitcoin (BTC) and Ether (ETH) futures have been converted into cash.
It was observed that $ 555 million Bitcoin and $ 336 million Ether turned into cash. On the other hand, altcoins such as XRP, EOS, and Litecoin (LTC) have also seen huge spikes.
While the lion’s share appeared on Binance, the least transactions were seen on the Bitfinex stock exchange. According to Bitfinex CTO Paolo Ardoino, this picture was created thanks to the former investors holding the largest share.
“Bitfinex has almost $ 1 billion in open positions, but has an extremely low cash-to-cash liquidation rate compared to competitors,” Ardoino said.
“Bitfinex seems to have traders who use leverage more carefully.”
The factors behind the short term price drop
During the correction, Bitcoin remained relatively resistant compared to the rest of the market. Often, large-volume altcoins and DeFi tokens such as Cosmos (ATOM) and SushiSwap (SUSHI) suffered the biggest losses.
As a result of the altcoin futures market going excessively high for a long time, the market has probably seen a correction.
In the past weeks, many altcoins on platforms such as Binance Futures have seen their funding rates rise to about 0.3 to 0.7 percent. Leveraged transactions are probably the reason for Bitcoin’s relatively small drop of about 7 percent compared to 20 to 30 percent corrections in the altcoin market.
However, unlike Bitcoin, as Cointelegraph reported, Ether showed short-term weakness even as Bitcoin rose to an all-time high.
Therefore, when BTC started to drop, Ether saw a much larger drop compared to Bitcoin, and fell 9 percent over the same period.
How likely is the market recovery?
According to CryptoQuant CEO Ki Young Ju, cryptocurrency exchanges have enough stablecoin reserves to rebound for Bitcoin.
In the crypto market, dumped capital is often stored as stablecoins rather than cash, as it is much easier and faster to distribute on exchanges. He said that this is an ideal time to buy Bitcoins given that a new rally is more likely. He wrote:
“If you are a long-term investor, now is the time to buy $ BTC. I’m not sure how many corrections will be made along the way, but on-chain indicators say there are enough stablecoins on the exchanges for another Bitcoin rally.”
In addition to the strong technical data, altcoin prices started to improve rapidly after the correction.
After the strong relaxation rally in altcoin prices, Bitcoin and Ether rose to $ 48,000 and $ 1,800 respectively.
The rapid recovery of large volumes of altcoins and the abundance of stablecoins in exchanges increase the likelihood that the BTC rally will continue.