The Volatile Crypto Market: A Cautionary Sign

The crypto market is experiencing a highly volatile period, marked by rising liquidations and a surge in trading volume. According to data from Coinglass, the total crypto liquidations increased by 70% over the past day, reaching $650 million, with long liquidations exceeding shorts by $366 million to $284 million.

Market-wide cooldown signs

The majority of the crypto assets have already recorded long liquidations, indicating a potential market-wide cooldown as the highly volatile sector shows signs of overheating. Bitcoin, the flagship asset, saw $122.1 million in liquidations, primarily due to its rally to a new all-time high of $81,858, which pushed its market cap to $1.6 trillion.

Altcoin dynamics

Ethereum, the leading altcoin, registered $91.2 million in liquidations over the past day, with $56.7 million of those coming from long positions. The altcoin’s three-month high of $3,241 has started to recede, suggesting a downward momentum.

Exchange and market trends

The majority of the liquidations, worth $262 million, occurred on Binance, the largest crypto exchange by trading volume, with 59% of those coming from long positions. Coinglass data also shows that the total crypto open interest gained 1.13% over the past day, currently sitting at $91.9 billion.

Market sentiment and outlook

The global cryptocurrency market cap reached a three-year high of $2.9 trillion, with a trading volume of over $300 billion. Bitcoin’s surge above the $80,000 mark put it in the overbought zone, with its Relative Strength Index (RSI) reaching 75. This usually indicates a high possibility of short-term profit-taking.

Expert insights

“The bull run has not been triggered by retail investors,” said Gemini co-founder Cameron Winklevoss. On the other hand, CryptoQuant CEO Ki Young Ju claimed that the futures market has “overheated” and might hint at a bearish 2025 ahead.

What to expect

High volatility would be expected in the market before another major push due to the increasing open interest, liquidations, and trading volume. Investors should be cautious and monitor market trends closely, as the crypto market can be unpredictable.

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