The cryptocurrency market has experienced a significant downturn in derivatives following the recent price crash of Bitcoin. The Estimated Leverage Ratio (ELR) on Binance plummeted by 28% from its previous high, indicating that overleveraged traders were completely wiped out in what analysts are calling a massive deleveraging event.
This correction is seen as necessary to eliminate excessive risk-taking and create a healthier foundation for Bitcoin's growth. However, analysts are divided on whether this marks the end of the market's volatility or just a pause before more selling. The recent price action remains choppy, with Bitcoin currently trading near $67,950.
Market watchers believe that the reduced leverage means fewer liquidations ahead, but fresh capital from spot markets is still needed to sustain any rally. Trading volumes remain elevated as investors try to position for whatever comes next, but there's no clear catalyst on the horizon. Institutions may be positioning themselves for future moves while retail traders were getting liquidated.