Bankless: The bull market pause is an opportunity to buy on dips?

By Jack Inabinet, Bankless

Compiled by: Kate, Mars Finance

The crypto market is experiencing its worst day since August last year. Bitcoin fell 7.3%, Ethereum fell 7.5%,cryptocurrencyTotal market capitalization (TOTAL) defends $1.5 trillion. This pullback is an opportunity to buy on dipsXiaobai NavigationWill it?

Over $480 million in long and short trades were liquidated in the past 24 hours as a result of market volatility, the largest liquidation since early November.

Source: CoinGlass

As longs accounted for 90% of total liquidations, perpetual funding rates have dropped significantly. While Bitcoin’s funding rate has dropped from 0.030% to a relatively healthy 0.013%, it is still at a high level.

When the perpetual funding rate is positive, longs pay shorts to compensate for the perpetual instrument's price being higher than the spot price of an asset. With funding rates above 0.01%, long positions are at greater risk of being squeezed out.

Since September last year, leverage in the crypto market has been rising continuously, and the open interest of Bitcoin futures has soared by 92% to $19.2 billion. It is natural to have a small correction to punish buyers with excessive leverage.

While there is no guarantee that the sell-off has stopped, many expect the crypto market to rebound in 2024, driven by the approval of a spot Bitcoin ETF and expect outside capital to flow into the crypto market.

[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.

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