Bitcoin Price Drops As Altcoin Traders Face Rising Pressure

The recent upward movement of Bitcoin has encountered resistance after reaching a record high of over $111,000 last week. Following this new all-time high, Bitcoin has fallen about 4% over the past seven days, bringing the current trading price down to $105,485. This indicates a daily fall of 1.8%, reflecting the cautious sentiment of the market and the potential profit-taking by traders. In light of the recent price fluctuations, an analyst from CryptoQuant has been closely monitoring market movements, particularly regarding the launch of the Bitcoin (ETF). A detailed analysis by Joao Wedson, a contributor to the QuickTake platform of CryptoQuant, has shed light on the liquidation trend observed in Bitcoin compared to other cryptocurrencies, commonly referred to as altcoins. The liquidation spread between Bitcoin and Altcoin Since the launch of the Bitcoin ETF, market behavior has shown a significant difference between the liquidation of Bitcoin and altcoins. According to Wedson, Bitcoin liquidations on Binance are primarily related to short positions, indicating that traders betting against Bitcoin have been systematically liquidated during this recent price surge of the coin. Specifically, the Cumulative Liquidation Delta (CLD) shows that short liquidations exceed long liquidations by about 190 million dollars. This indicates that market participants holding short positions are forced to exit as the value of Bitcoin surges, pushing the price even higher.

On the contrary, altcoin has undergone a completely different scenario. During the same period, altcoin faced nearly 1 billion dollars in long liquidations more than in short. This liquidation imbalance indicates that traders betting on a broad recovery of altcoins have suffered significant losses. Continuous downward pressure on altcoins shows the failure of expectations surrounding "Altseason," a period when alternative cryptocurrencies usually outperform BTC. The consequences of market asymmetry The distinct liquidation patterns between BTC and altcoin reflect significant changes in investor risk sentiment and the use of leverage. The favorable price performance of BTC primarily impacts traders with bearish outlooks, forcing them to liquidate short positions and contributing to bullish market sentiment. In contrast, the continuous price fall in the altcoin sector has led to widespread liquidation of long positions, highlighting the discrepancy between traders' expectations and the actual behavior of the market. According to Wedson, since December 2024, this liquidation asymmetry has significantly widened, highlighting a shift in market focus. Investors increasingly view BTC as a safer or more reliable bet amid broader market instability, while altcoins are affected by high leverage and speculative positioning. This trend has become even stronger after the ETF was approved, as traders seem more confident in betting on the stability and growth potential of Bitcoin compared to the volatility and unpredictability of the altcoin market. Moving forward, the current market conditions suggest that investors may continue to approach Bitcoin with moderate optimism while maintaining a cautious stance towards altcoins.