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February’s Market Crash Drives Out Crypto Leverage Traders

Glassnode claims SUSHI Token’s fair value is 80% less than the current price

Glassnode stands as one of the most prominent on-chain crypto analytics providers, and has recently given data regarding the latest market crash within the crypto space. This crash, having occurred during late February, may indeed have smoked out the most excessive leverage traders within the crypto space.

Another “Healthy” Correction

The report itself, published on the 1st of March 2021, took the time to analyze the most recent market crash. This market crash stands as one of only two major market corrections, daringly described as “healthy” by institutional players, that have occurred ever since Bitcoin broke into a new ATH in late 2020. Since then, the market is only growing, these massive crashes only treated as setbacks over the long term.

Glassnode highlighted that the crash was a 25% drop at its peak, making Bitcoin sink down from its original price of $58,300 to $43,343. This means that this crash, though more in terms of monetary loss, is actually weaker than what was seen back in January of this year. Back then, the price of Bitcoin corrected by 30%, going from $42,000 to less than $30,000.

Purging The Weak From BTC Markets

As always, and much to the protest to those that bought just before the crash, this market correction is seen as healthy by Glassnode.

Crypto Exchanges Face Outages as Bitcoin moves to fresh highs

This time around, the blame is put on the various leveraged positions being liquidated from investors that have more risk-taking skills than wisdom. In particular, Glassnode proclaimed that these corrections help test the conviction of the traders, as if it was some religious thing, as well as flush out the weakest hands. It even helps with the speculation, as new people buy in with the lowered prices.

With Bitcoin prices finding new support, Glassnode highlighted that an array of crypto metrics regarding the asset has effectively been reset. A prime example of this would be futures open interest, the price premium of Grayscale’s GBTC, as well as the funding rates for futures.

Some Finer Details

The open interest for Bitcoin futures, in particular, saw a spectacular drop in value. The amount of unsettled contracts saw a decrease of almost $4 billion, dropping down by 22% since its $18.4 billion peak.

The funding rate for perpetual zeroes had dropped down close to zero as well, effectively resetting the entire metric. This, in and of itself, shows that traders aren’t really keen on entering short positions anymore, which Glassnode sees as one of the factors showing a purge of speculative trading.

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      A journalist, with experience in web journalism and marketing. Ali holds a master's degree in finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of cryptocurrency publications.