12 April, 2024

Massive Long Liquidations Indicate Possible Turnaround for Altcoin Market

11 Sep, 2023

24 Nov, 2023

  • A sudden weekend drop-in altcoin prices led to $54.2 million in liquidations.
  • The Altcoin Season Index shows a promising uptrend, currently standing at 33.
  • Bitcoin price instability remains a key variable in the altcoin market recovery.

Over the past weekend, the cryptocurrency world witnessed a significant decline in altcoin prices, which led to the liquidation of about $54.2 million in long positions. The liquidation figure, not counting the $8.27 million liquidated in Bitcoin (BTC), is the second-largest within ten days. The last time the altcoin market saw liquidations exceed $50 million was on September 1. 

Though these liquidations often signify a declining market, they have a silver lining: they usually precede significant price volatility, which could swing either way up or down. Market analysts are optimistic that this liquidation event could catalyze an upward trend in this case. Some market experts see this substantial liquidation as an indication that the prolonged downtrend in the altcoin market could soon come to an end.

Prominent cryptocurrency expert Michaël van de Poppe posited that the altcoin market is likely nearing the end of its depressive cycle. He contends that the recent wave of mass liquidations could represent the last manipulative move before a positive price trend emerges. The Altcoin Season Index from Blockchaincenter.net backs this perspective, which evaluates the past 90-day performance of the top 50 altcoins on a scale of 0 to 100. The index has recently ascended to 33, suggesting that Bitcoin’s dominance could diminish, thus setting the stage for altcoins to gain prominence.

Altcoin Season Index, Source: Blockchaincenter.net

However, the potential for altcoin recovery comes with its challenges. One critical obstacle is the volatility of Bitcoin prices. The alt season generally involves traders shifting profits from Bitcoin to altcoins. But if Bitcoin prices crash, this often sends ripples across the altcoin market, pulling down their values. During Bitcoin price crashes, there is usually a large outflow of capital, which doesn’t typically rotate into altcoins but exits the market altogether. Hence, a Bitcoin crash could seriously hamper the altcoin market’s potential for recovery.

In summary, the recent liquidations and shifts in key metrics are cautiously optimistic signs that the altcoin market could soon break free from its downtrend. However, the impending recovery remains delicately tethered to Bitcoin’s performance, warranting close observation from the investment community.


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