Crypto Market Clearing of Excess Leverage: What CryptoQuant Analysts Say
Date: 2025-02-05 Author: Henry Casey Categories: CRYPTO PAYMENTS
This is confirmed by sharp derivatives liquidations and a change in the open interest trend, which has sharply decreased after rising.
The experts noted that this process shows how confident the group of investors felt, which was full of optimism and positive expectations. However, with the fall in prices and the deterioration of market sentiment, analysts saw signs of aggressive buying, including in the dynamics of the premium on Coinbase. This, according to the experts, contributed to the clearing of the market.
Despite possible short-term fluctuations and high volatility, in the future, according to CryptoQuant, large investors, or “whales”, are likely to go in the opposite direction. These findings are also supported by data from the analytical company Glassnode, which shows a decrease in the level of speculation in the market.
According to experts' calculations, the situation in the perpetual contracts market resembles April 2024, when after reaching the all-time high (ATH), the value of contracts fell sharply, reflecting growing bearish sentiment. This is also due to a change in the market structure, the transition from the accumulation phase (highlighted in orange) to the distribution phase (in turquoise), which serves as signs of preparation for a late bull run.
Experts are confident that Bitcoin can still reach significant price levels. In particular, the cost of funding perpetual contracts is at a low level, which is similar to the situation in the summer of 2024. This suggests that the market is far from overheating and excessive leverage, and the market structure supports the continuation of the bullish trend. According to CryptoQuant, the “fair” price of Bitcoin is around $87,990.
Meanwhile, according to Standard Chartered, Bitcoin could rise to $112,000–$130,000 over the next two months, due to an expected increase in institutional investment and a shift in risk sentiment. Earlier, Bitwise analysts also suggested that Bitcoin would experience less severe corrections, due to the initiatives of US President Donald Trump.
