Analyst Explains Market Conditions in Recent Bitcoin High vs. 2021 Bull Run Peak
Are you wondering why the recent high in Bitcoin has seen different market conditions compared to the 2021 bull run peak? Well, on-chain analyst Checkmate has some insights for you.
In a recent post, Checkmate highlighted a major difference in the trend of liquidations on derivatives markets between the latest 2024 high and the 2021 peak. The chart shared by the analyst shows a dominance of short liquidations in the recent market high, indicating a different pattern from the long liquidations seen during the 2021 peak.
What does this mean? “Liquidation” in this context refers to the forceful closure of derivatives market contracts when they accumulate losses beyond a certain point. During volatile price movements, such as sharp rallies or crashes, liquidations can pile up in the market.
The recent Bitcoin rally has seen short holders taking a beating, as rapid price growth pushed many of these contracts towards liquidation. This trend of short dominance has continued even during the recent market stagnation, where short liquidations have outweighed long ones despite a decrease in price.
In contrast, the 2021 peaks saw a different trend, with long liquidations occurring as Bitcoin reached the top. This difference in market behavior can be attributed to the level of greed among investors, with the recent rally showing less greed compared to the 2021 peak.
But what about the future price of Bitcoin? Analyst Maartunn has pointed out another indicator, the Coin Days Destroyed (CDD), which indicates the scale of dormant coin movement in the market. Although the CDD has reached high levels recently, Maartunn suggests that Bitcoin’s price typically peaks around the same time.
As of now, Bitcoin is trading around $62,200, up more than 5% over the past week. The price chart indicates a slight decline in the last few days, but the overall trend remains positive.
In conclusion, the recent market conditions in Bitcoin’s high have been influenced by a dominance of short liquidations, signaling a difference from the 2021 bull run peak. It will be interesting to see how these trends evolve in the coming weeks and months. Stay tuned for more updates on the cryptocurrency market!
