Volatile Times

Chart of the Day

After a short-lived recovery from the new year slump, most leading cryptocurrencies have now once again flipped red, with BTC falling below the $40k handle for the first time since August of last year in the early hours of Tuesday. BTC's dramatic price decline below the $40k psychological support has caused many leveraged traders to bleed, as more than 100k traders were unfortunately liquidated by this event. Thankfully, the number one cryptocurrency by market cap has since bounced back to the $41k range, where it is currently trading at as of the time of writing. ETH seems to be moving in a similar trajectory to BTC, as the second largest cryptocurrency by market cap also briefly dipped below the $3,000 level in the early hours of Tuesday, shedding 2% of its market value in the process, before rebounding back above the $3,100 level that it is currently trading at as of the time of writing. It appears that this price volatility is here to stay, at least for the near to mid-term, as leveraged positions in the derivatives market have been building up at an accelerated pace, pointing toward an outsized interest in speculative bets on BTC's price action against the lack of enthusiasm in the spot market. In addition, the futures open interest leverage ratio is fast approaching the 2% threshold, directly indicating a growing risk of short-term high volatility.