Bankless: Is the bull market pause an opportunity to buy the dip?
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Bankless: Is the bull market pause an opportunity to buy the dip?
Investors face the worst cryptocurrency downturn in months, but external capital is expected to flow in, paving the way for a potential recovery in the crypto market in 2024.
Navigating Web3 tides with focused insightsAuthor: Jack Inabinet, Bankless
Translation: Kate, Mars Finance
The crypto market is experiencing its worst day since last August. Bitcoin dropped 7.3%, Ethereum fell 7.5%, and the total cryptocurrency market cap (TOTAL) is defending the $1.5 trillion level. Is this pullback an opportunity to buy the dip?
Over the past 24 hours, more than $480 million in long and short positions were liquidated due to market volatility—the largest liquidation event since early November.
Source: CoinGlass
With longs accounting for 90% of total liquidations, perpetual funding rates have sharply declined. While Bitcoin's funding rate has dropped from 0.030% to a relatively healthy 0.013%, it remains elevated.
When perpetual funding rates are positive, longs pay shorts a fee to compensate for the price of the perpetual contract trading above the spot price of the asset. With funding rates above 0.01%, there is increased risk of long positions being squeezed out.
Since September last year, leverage in the crypto market has been steadily rising, with open interest in Bitcoin futures surging 92% to $19.2 billion. A minor correction is natural as a way to penalize overly leveraged buyers.
While there's no guarantee that selling pressure has ended, many expect the crypto market to rebound in 2024, driven by anticipated approval of spot Bitcoin ETFs and expected inflows of external capital into the crypto space.
【Disclaimer】Markets involve risk, and investment requires caution. This article does not constitute investment advice. Readers should consider whether any opinions, viewpoints, or conclusions expressed herein are suitable for their particular circumstances. Investment decisions based on this information are made at the user’s own risk.
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