The past few days have been extremely challenging for many altcoin holders. While Bitcoin remained relatively stable, altcoins experienced a significant price decline of an average of 20%. This downturn was primarily derivative-driven and characterized by an abrupt, flush-like correction.
Characteristics of the Recent Market Crash
The price decline began over the weekend and intensified throughout Monday. Bitcoin, which was trading above $100,000 at the beginning of the day, rapidly fell to around $95,000. This decline led to the liquidation of more than $750 million in leveraged derivative positions, with the majority affecting bullish positions.
Impact on Specific Altcoins
Some altcoins were particularly affected:
- Ethereum (ETH) fell by about 10% to $3,590.
- Cardano (ADA), Avalanche (AVAX), and XRP recorded declines of up to 20%.
- The CoinDesk 20 Index, which includes the 20 largest crypto assets, dropped by more than 8%.
Reasons for the Market Crash
Several factors contributed to this decline:
- Reduced trading volume on crypto exchanges
- Profit-taking by long-term holders
- Liquidations of leveraged positions
Market Analysis and Outlook
Despite the current decline, analysts remain optimistic about a market recovery. Many traders in the options market are now positioning themselves for a sideways price movement until the end of the year, with some unwinding their bullish positions and potentially shifting them to early next year.
Our Investment Strategy
Given the current market situation, we have invested heavily in the following assets:
- Ethereum
- Solana
- Injective
- Render
- Fetch.ai
- WIF
Short-term Forecast
Our current assessment is that we could see another upward movement in the short term, followed by a final lower low. However, it’s important to emphasize that we are already well-positioned. If no further low forms, this would also be acceptable.
Risk Assessment
At present, we are no longer in “Up Only” mode, at least in the short term. Therefore, the use of leverage is currently associated with increased risks and should be approached with caution.
Conclusion
The crypto market is going through a consolidation phase, which is typical for bull markets. While short-term volatility and corrections are to be expected, the long-term trend remains positive. Investors should adapt their strategies to the current market dynamics and carefully weigh risks.