Get ready for the rollercoaster ride in the world of Bitcoin as prices hit a nine-week low just below $57,000 on May 1, dropping 4% in a single day. The asset has seen an 11% decrease since last week.
While market dips are common, Glassnode analyst James Check believes that this time is unique.
Despite significant deleveraging events in 2021 and earlier this year, Check does not attribute the recent crypto crash to derivatives.
Insights on Derivatives
“Funding rates have cooled off gradually, a healthy sign indicating no massive futures margin calls,” Check explained.
Funding rates play a crucial role in maintaining the equilibrium between contract price and underlying asset price on derivatives exchanges.
Bitcoin futures Open Interest (OI) has dwindled in the past year in BTC terms, indicating a relative reduction in leverage.
Despite two notable deleveraging events in futures markets before the recent sell-off, Check believes derivatives were not the primary driver.
“This sell-off is likely due to spot-driven weakness, a combination of short-term selling pressure and reduced demand,” Check stated.
With around $1.3 billion in OI for Friday’s Bitcoin options expiry event, the demand for derivatives seems unaffected.
Crypto Market Fluctuations
The overall market cap has plummeted by over $240 billion in the last week, reaching $2.26 trillion during Thursday morning trading in Asia.
While the market has shrunk by 22% from its 2024 peak, technical analyst ‘Rekt Capital’ remains optimistic, suggesting a re-accumulation phase.
Bitcoin is currently trading at $57,469, with Ethereum dropping 2% to $2,920. Altcoins show mixed performance, with Binance Coin (BNB) and Toncoin (TON) experiencing notable losses.
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