Bitcoin prices slumped to a nine-week low just below $57,000 on May 1, shedding a further 4% on the day. The asset has now bled a whopping 11% since the same time last week.
Market dips and flush-outs are not uncommon for crypto assets, but Glassnode analyst James Check thinks this time is different.
Large derivatives-led deleveraging events were a big feature in the 2021 bull market and have been seen on several occasions this year, the last one in mid-April.
However, Check observed that they did not cause this week’s crypto crash in a post to X on May 2.
Funding rates are fees set by derivatives exchanges to maintain the balance between the contract price and the underlying asset price.
The analyst produced another chart showing that Bitcoin futures Open Interest (OI) has declined over the last year in BTC terms.
Open Interest is the number of outstanding crypto derivatives contracts that have yet to be settled.
Check acknowledged that futures markets also saw two significant deleveraging events prior to this sell-off but added, “Again, it doesn’t feel like derivatives were the dominant factor in this Bitcoin sell-off.”
According to Deribit, there is around $1.3 billion in OI for Friday’s Bitcoin options expiry event showing that demand for derivatives remains healthy.
Total market capitalization has declined by over $240 billion over the past week, falling to $2.26 trillion during Thursday morning trading in Asia.
The wider market has shrunk by 22% since its 2024 peak level of around $2.9 trillion.
Technical analyst ‘Rekt Capital’ was unfazed, stating that markets have entered a historically recurring re-accumulation phase.
BTC was trading at $57,469 at the time of writing, while ETH had slumped 2% to $2,920. The altcoins were a mixed bag today, but Binance Coin (BNB) and Toncoin (TON) were seeing larger losses.
The post This Time Its Different, BTC Slump Not Caused by Leverage Flushout: Analyst appeared first on CryptoPotato.
Market dips and flush-outs are not uncommon for crypto assets, but Glassnode analyst James Check thinks this time is different.
Large derivatives-led deleveraging events were a big feature in the 2021 bull market and have been seen on several occasions this year, the last one in mid-April.
However, Check observed that they did not cause this week’s crypto crash in a post to X on May 2.
Derivatives Not The Cause
Funding rates are fees set by derivatives exchanges to maintain the balance between the contract price and the underlying asset price.
For those of you around in the 2021 #Bitcoin bull market, you will remember the massive derivatives led deleveraging events which killed it.
Are we seeing a derivatives led flush out today?
I don’t think so.
Funding rates have cooled off gradually, not violently, which is… pic.twitter.com/KSDoAMCVSF
— _Checkmate
(@_Checkmatey_) May 2, 2024
The analyst produced another chart showing that Bitcoin futures Open Interest (OI) has declined over the last year in BTC terms.
Open Interest is the number of outstanding crypto derivatives contracts that have yet to be settled.
Check acknowledged that futures markets also saw two significant deleveraging events prior to this sell-off but added, “Again, it doesn’t feel like derivatives were the dominant factor in this Bitcoin sell-off.”
According to Deribit, there is around $1.3 billion in OI for Friday’s Bitcoin options expiry event showing that demand for derivatives remains healthy.
Crypto Markets Bleed
Total market capitalization has declined by over $240 billion over the past week, falling to $2.26 trillion during Thursday morning trading in Asia.
The wider market has shrunk by 22% since its 2024 peak level of around $2.9 trillion.
Technical analyst ‘Rekt Capital’ was unfazed, stating that markets have entered a historically recurring re-accumulation phase.
BTC was trading at $57,469 at the time of writing, while ETH had slumped 2% to $2,920. The altcoins were a mixed bag today, but Binance Coin (BNB) and Toncoin (TON) were seeing larger losses.
The post This Time Its Different, BTC Slump Not Caused by Leverage Flushout: Analyst appeared first on CryptoPotato.
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