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Brutal week so far for altcoins.
In the stock market, you usually look for a Santa Claus rally in late December to early January as a nice, green way to close the year and welcome a new chapter.
Whether we would see the same in crypto is still up in the air. Right now it looks weird.
On the upside, altcoin leverage continued through December 5, but Monday saw the largest daily long liquidation event since May 2021, as K33 analysts noted. Ouch.
“Since the election, long bets have been made. This dynamic allowed open interest to accumulate with long and gradually increasing concentration. This growth can be seen by looking at the total open interest in altcoins compared to the total altcoin market cap,” they wrote.
“This metric grew from 3.57% to 4.42% from the election to December 9, amid a very high level of funding in December. (Monday) altcoin leverage fell by $12.8bn, reducing relative altcoin leverage to 3.96%.
To put these metrics into perspective, altcoin open interest marked the “biggest relative decline in altcoin leverage since the fall of FTX.”
BitOoda analysts said, after Monday's sale, that they expect more “lateral trading through the end of the year characterized by periods of low liquidity and choppy price action.” And we may very well be seeing that with the highly leveraged products and “exaggerated” price action trends.
The good news, however, is that while this is a fairly large bump in the road, it doesn't seem to affect the bullish 2025 outlook that has been shared by many recently .
There may still be hope for Santa's collection.
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