Market factors behind BTC’s correction from $50K top


According to some experts watching closely as Bitcoin rebounds back down from the $50,000 mark, one of the big drivers in this summit rejection was a large amount of Bitcoin futures positions, to the tune of $1.89 billion, liquidated in the past market cycle.


At Cointelegraph, Joseph Young shows how cryptocurrencies like Bitcoin and Ethereum have reacted to this shedding of futures investment, along with altcoins like Ripple and Litecoin.

“Bitcoin was relatively resilient compared with the rest of the market during the correction,” Young writes. “Mostly, large-cap altcoins and decentralized finance tokens saw the biggest losses, such as Cosmos’ ATOM and SushiSwap’s SUSHI dropping by over 20% in a single day. The market likely corrected as a result of the altcoin futures market being extremely overheated for a prolonged period.”

Young also breaks down the action by major exchanges, where the greatest share of liquidation was seen on Binance, with $993 million worth of departures; Young attributes this to Binance having a greater volume of “novice” traders aboard, though other factors may also apply.


Next after Binance is Huobi, with $370 million, and Bybit, with $292 million. OKEx charted $111 million and BitMex $53 million, although some it’s important to note that the overall market volumes for both of these exchanges deteriorated rapidly after investigations and prosecutions of the platforms.


Young also points out the relative strength of ETH in all of this.


“Throughout February, especially when the ETH/BTC pair was showing strength, ETH saw a smaller pullback compared with Bitcoin as it entered price discovery,” he writes. “The weakness of ETH against Bitcoin has had a negative impact on the altcoin market in the last 24 hours.”


Over at Coindesk, meanwhile, Omkar Godbole cites funding stress, weakness in institutional demand, and “chart-driven factors” as relevant indicators.


“The 10-day moving average of daily volume has been declining since early February,” Godbole writes. “A low-volume price rise is often short-lived and prone to sudden pullbacks, similar to the one seen early today.”


Stay tuned as BTC continues to move. Many believe it will move higher in the long term; short term movements are more controversial.