Using high leverage is a common feature of crypto trading and over the course of last week, as the Bitcoin price dropped, over $600 million worth of long Bitcoin futures contracts were liquidated. This counts for only 2% of the total BTC futures market, which is a positive considering that in a weak market, excessive leverage is generally at play.
Aggregate futures open interest
The last time BTC dropped sharply on September 7, the aggregate futures open interest suffered a drastic drop. The lack of such a drop this time around seems to indicate the price may have bottomed out, establishing support around $56,500.
Accumulating leveraged longs
Meanwhile, margin traders are still accumulating leveraged longs as evidenced by the fact that traders are borrowing more USDT to increase their exposure even after the drop, as compared to the weeks before when BTC was rallying. These factors suggest the market is still positive and the bulls are resilient. A period of consolidation followed by a fresh push to the top could be on the cards.
Altcoins Rally As BTC and ETH Take a Backseat
The last couple of months have seen Metaverse projects take off, and that was evident last week as Metaverse tokens brushed Bitcoin's fall aside to post massive gains. GALA posted gains of 160%, SAND rose over 60%, and MANA gained over 45%.
Meanwhile, AVAX exploded and hit its all-time high of $147 as TVL on the layer-1 network reached new highs and Binance.US announced plans to list the token. ENJ rallied close to its all-time high of $4 as the project aims to secure a Polkadot parachain slot. EGLD also reached its all-time high as it launched the Maiar Decentralized Exchange alongside a $1.29 billion liquidity incentive program.
You can find all the cryptoccurency and token here on gate.io.