Brutal week thus far for altcoins.
Within the inventory market, you typically search for a Santa Claus rally on the finish of December into early January as a pleasant, inexperienced strategy to shut out the yr and welcome a brand new chapter.
Whether or not we may see an analogous factor in crypto remains to be up within the air. Proper now it’s trying iffy.
On the upside, altcoin leverage managed to carry by means of Dec. 5, however Monday noticed the most important each day lengthy liquidation occasion since Could 2021, as K33 analysts famous. Ouch.
“Ever since the election, long bets have been rewarded. This dynamic allowed open interest to accumulate with a steadily growing long concentration. This growth is evident by looking at total open interest in altcoins relative to the total altcoin market cap,” they wrote.
“This metric grew from 3.57% to 4.42% from the election until December 9, amidst a very high funding rate environment in December. [Monday’s] liquidation cascade saw altcoin leverage plunge by $12.8bn, reducing the relative altcoin leverage to 3.96%.”
To place these metrics into perspective, altcoin open curiosity marked the “biggest relative decline in altcoin leverage since the FTX collapse.”
BitOoda analysts, following Monday’s sell-off, stated that they anticipate extra “sideways trading through year-end marked by periods of low liquidity and choppy price action.” And we very nicely may even see that given the extremely leveraged merchandise and “exaggerated” worth motion strikes.
The excellent news, nonetheless, is that whereas this can be a decently sized bump within the highway, it doesn’t sound prefer it’s impacting the bullish 2025 outlook shared recently by many.
Maybe there’s nonetheless hope for a Santa rally.
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