The cryptocurrency market has endured another tumultuous day, with total liquidations soaring to nearly $1 billion within just 24 hours. This latest wave of selling has particularly impacted altcoins, which have seen an average decline of over 12%. The unsettling trend continues a downward spiral that began last weekend, during which the market lost an alarming $500 billion in value.
As the dust settles, Bitcoin futures open interest remains steady at approximately $25 billion. However, a closer look at funding rates reveals a stark divergence across major exchanges. Both Binance and OKX are witnessing negative funding rates between -2% and -3%, a clear indicator that many traders are betting on further price declines. In contrast, other exchanges have exhibited flat or slightly positive rates, suggesting a more cautious approach from some market participants.
Interestingly, the options market presents a different narrative. The 1-week 25 Delta Skew has jumped to 12.62%, indicating that traders are willing to pay higher premiums for call options, anticipating potential price recoveries. This sentiment is underscored by a balanced Put/Call Volume ratio, reflecting consistent demand from both buyers and sellers in the options arena.
Liquidations Paint a Grim Picture
The liquidation data reveals that long positions constitute a staggering 70% of the total liquidations, with Ethereum leading the pack at $115 million, followed closely by Bitcoin at $80 million. Other cryptocurrencies contributed an additional $43 million to the liquidations. The total figure reached $999 million, a concerning statistic for traders who are now faced with increased market volatility.
Monitoring the situation closely, the Binance liquidation heatmap has pinpointed $110,009 as a critical level for Bitcoin, which could trigger even more liquidations if the price experiences further declines.
Altcoin Landscape
The altcoin market has not fared well amidst the broader market downturn. Notable coins such as TAO, ASTER, and LDO have all suffered losses exceeding 12%. Meanwhile, TRX has emerged as an unexpected outlier, managing to post modest gains while the majority of the market falters. Market liquidity has remained thin, as traders exercise caution to prevent a repeat of the previous weekend’s liquidation chaos.
Traditional Markets Mirror Crypto Trends
The volatility in the cryptocurrency space is mirrored in traditional markets, where US stocks experienced declines on Thursday. The Dow Jones Industrial Average fell by 300 points, or 0.6%, while the S&P 500 and Nasdaq Composite both dropped by 0.6% and 0.5%, respectively. Concerns over regional bank loans and ongoing US-China trade tensions have contributed to investor anxiety.
In the bond market, the 10-year Treasury yield dipped below 4% as investors sought safety in bonds amidst the uncertainty. Meanwhile, gold prices have surged above $4,300 per ounce, marking a new record. The ongoing US government shutdown, now in its third week, has further complicated matters, hindering the Federal Reserve and Wall Street from accessing critical economic data.
As the crypto market grapples with these challenges, the potential for increased volatility looms large. With significant liquidation levels and mixed signals from both the futures and options markets, traders are advised to remain vigilant and prepared for further market shifts.
