After the All Time High test by Bitcoin, the bears dominated the market with a massive sell - off that reached around $10K in a very short time. As a result of the drop in the price of Bitcoin, the altcoins were oversold in double digits. As you know, if Bitcoin sneezes, the altcoins get the cold.
Though the majority of the expectations were on behalf of a correction in the entire crypto ecosystem, it actually did not take place. Rather, the correction happened in the funding rates and hopium level of the investors. Not surprisingly, Bitcoin pretended as if nothing happened, and millions of dollars were not liquidated.
Dynamics of the Markets Do not Change
We need to understand some of the whale rules that govern almost all markets in the existing system. First of all, the liquidity is never left back; the markets always test the certain high – liquidity levels to make the long or short positions triggered to be closed. In the case that everyone is bullish on Bitcoin and the domination of open positions is around 5% higher for longs, then the market will keep the pressure on the price hard while the rest of the market is up 20% - 50% already.
Sometimes the pressure increases, and the market maker may choose to trigger the liquidation prices before a huge pump. In this way, there will only be a small group of investors that will make use of the upside move.
Though the rules are pretty basic, something has changed the order entirely: Spot Bitcoin ETFs. With the launch of this groundbreaking phenomenon, the rules of crypto are slightly changing.
The Correction of Wrongdoings
Imagine a market where the long positions were okay to pay for 0.09 every 8 hours.
This was an abnormal case that indicated a bubble in the charts. So, as you can see below, the funding rates have diminished and the current rate is almost half of what it was when Bitcoin tested its previous all time high level.
The good side of the recent drop is that the market does not go up with the power of long positions, rather, the Cumulative Volume Delta indicates that there was a pressure from the spot purchases, too. After that little dump, we see the growth of CVD is going on again.
Simply, leverage positions were hunted down while spot positions stayed untouched.
Again, the whales did not let everyone win at the same time. The impact of ETFs can be astonishing but there are a serious number of Bitcoin whales that can directly have an impact on the price of the coin. 69K was a strong resistance, maybe the strongest resistance apart from the previous ATH for Bitcoin, and it will require millions of dollars more to be liquidated before a sustainable upward price action.
Liquidations have always been an inseparable part of crypto. While there are giants that decide the direction of the whole market, we, as retail investors, need to observe the data from ETFs, whales, and tokenomics to be able to see the near future.
What are your strategies in the crypto ecosystem in which Bitcoin ETFs play an active role?
Share your strategies below 👇
Hive On ✌️