Many times, macro market sentiment affects crypto prices but, yesterday, it seems like it might have been the opposite. I won’t dive too deep into it but traditional markets had a strong risk-off session.
In the crypto space, we saw drastic moves gripping markets in the past two sessions.
From the all-time high to the intraday low, BTC prices have retraced a full 53%. One doesn’t even need to zoom out much to see impressive moves; yesterday, BTC whipsawed from 43,000 to 30,000 or a 30% down move. Later in the session, prices bounced back over 25% to $38,000.
As it’s often the case, what we saw was a massive liquidation event. While in the past few weeks leverage on derivatives exchanges had decreased, there was still enough to trigger in the first hour of the crash over $3.3 Bn of liquidated longs (and of course a similar dynamic occurred on the bounce, after people got overly bearish). In the past 24 hours, over $9 Bn got “rekt”.
Funding rates across all exchanges just hit a year-low and signal an overly bearish market.
On top of Elon’s tweet last week, US regulators cracking down on crypto firms and then, more recently, China warning against crypto, we were bound for some aggressive moves lower. Those then got a few exchanges messed up with halted trading, deposits/withdrawal or pauses on leveraged trading.
During the move, it was fascinating to see that the BTC Dominance index rose sharply. We’ve talked about this before in this briefing; it had been constrained for a long time and was due for a shake up. We touched upon 45.5 and are now just a tad lower, at 44.2.
As indicated by this, alts didn’t hold up better and even now, after the bounce, most altcoins remain constrained lower. ETH fell over 40% on the session but then bounced back 34%. You will have guessed it, the smaller ones didn’t do better. From open to close, ADA, LINK, VET, XTZ all lost about 20%-30%.
I’ve been inundated by messages of people asking me “should I sell?” or “is this the crash”. My portfolio USD value is down, like everyone else’s, I don’t trade. My perspective though is: don’t buy high and sell low because of anxiety or violent market moves. As I’ve said in earlier briefings, I’ve been buying, with bids layered on the way down. I prefer to buy low and sell high.
The fundamentals really haven’t changed from the cash flowing into the market, to inflation, to adoption by payment providers and large corporates, to the arrival of more trading products and institutions.
By the way, the only coin up in my portfolio is EQO. EQUOS users: hold on tight.
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