Altcoin market experiences a series of large liquidations as traders switch from panic to FOMO
According to data shared by on-chain data provider Santiment, Bitcoin’s rapid spike to a new local high of $47,000 was followed by significant liquidation volume in the altcoin market.
As the chart suggests, the average altcoin funding rate swiftly bounced from the Short Zone and entered the Long Zone. As for the Bitcoin funding rate, it remained relatively neutral until BTC reached the resistance zone. Right before the spike to $47,000, the number of short orders on the market increased gradually.
The rise in the number of shorts is explained by the market’s disbelief towards the first cryptocurrency, which unsuccessfully tested resistance at least three times. But despite the negative market sentiment, as soon as BTC broke through it, the number of long orders immediately increased when FOMO trends hit the crypto market.
Liquidations hit $500 billion
As the substantial volume of short orders opened right before a strong positive BTC move, the market saw a rapid increase in the volume of liquidations, which currently reaches $500 million.
Bitcoin and Ethereum accounted for a large portion of the liquidations, with $170 million and $118 million respectively. As expected, the majority of orders liquidated on various centralized exchanges were short orders. But at the same time, some exchanges, such as Huobi, reported a greater volume of long liquidations.
While market participants enjoy the positive performance, some traders have already failed to capitalize on the rally by opening “FOMO longs” above $47,000, which resulted in liquidations as the first cryptocurrency retraced by almost 2% at some point.
