Recent volatility in the cryptocurrency market indicates that Bitcoin (BTC) may be at risk of further value decline, according to K33's analysis.
Impact of Open Positions on Bitcoin Market
According to K33 Research, the open interest in Bitcoin futures contracts has reached a two-year high, surpassing 310,000 BTC ($34 billion). An increase of 41,600 BTC has been recorded in the last two months, with 13,472 BTC added at the end of last week. Analyst Vetle Lunde noted that aggressive long positions have surged as funding rates rose from 3% to 11% annually, creating risks of a long squeeze in the short term.
Ethereum Market and Its Long-Term Trends
Despite Ethereum's record dollar-denominated price, its long-term trend against Bitcoin remains weak. 1-, 2-, and 3-year ETH/BTC yields remain in negative territory. Lunde pointed out that record highs for Ethereum have often coincided with peaks in the overall cryptocurrency market.
Comparison of Current Cycle with Previous Ones
Bitcoin's dominance currently stands at 58.6%, a stronger position compared to levels below 40% in previous cycles. Analyzing previous cycles, such as those in 2017 and 2021 when Ethereum's surge occurred amidst Bitcoin stagnation, Lunde emphasized the need for caution until excessive leverage is cleared.
The market analysis reveals that Bitcoin faces pressure due to aggressive position increases and the influence of Ethereum's rise. The future impact of these factors on market movements remains uncertain.
