Over the last 24 hours, the mainstream crypto market has experienced a significant downturn, resulting in a bloodbath for major players such as Bitcoin and Ethereum, which have plummeted by 5% and 6%, respectively. In response to this sell-off, crypto analyst Miles Deutscher has taken to Twitter to provide a detailed analysis of the situation and offer potential explanations for the price decline.
Deutscher reports that the looming market dumps of Bitcoin and Ethereum have caused unease among holders and traders. The distribution of Bitcoin by the now-defunct crypto exchange Mt. Gox, postponed for two months, is finally set to commence on March 10. This has led BTC holders and traders to speculate that the payouts could flood the crypto market with Bitcoins.
The Ethereum community is currently facing a situation similar to that of a hard fork in Shanghai. This event will result in the release of a staggering 17.5 million staked Ether, valued at almost $29 billion. As a result, investors in the crypto space are expressing concern over the potential influx of unlocked Ether flooding the market, as long-term stakes may choose to unlock their staking contracts.
According to reports from prominent investment firms, the impact of the crypto above unlocks may not be as severe as initially feared. Experts at UBS Investment Banking Company have suggested that concerns surrounding Mt. Gox’s BTC payouts may be exaggerated, as major creditors have chosen to receive crypto payouts instead of fiat. This insight means that the aftermath of these unlocks may not be as dire as previously thought.
The verdict on the ETH unlocks to be a topic of debate. While Bernstein has advised prudence leading up to the Shanghai upgrade, other asset management firms have posited that the opening is improbable to generate any selling pressure or adversely affect ETH.
According to Coinglass data, astute traders have quickly seized the opportunity presented by Bitcoin’s reduced price. The leading cryptocurrency currently boasts an impressive $73 million in active long positions, compared to a mere $4 in shorts at the time of this report. Similarly, ETH has also attracted significant interest, with $40 million worth of longs and $1.58 million in shorts. These metrics demonstrate the shrewdness of traders who have recognized the potential for profit in the current market conditions.
