K33: Bitcoin and Altcoins are in an Upward Trend

After the severe liquidation wave in the cryptocurrency market last week, the clearing of leveraged positions has created a healthier market environment. Research and brokerage firm K33 Research stated in its latest report that the market has entered a 'structurally bullish' period following last week’s decline. K33 Research Director Vetle Lunde mentioned that the excessive leverage buildup over the past months has been wiped out with this collapse, thus laying the foundation for a new upward trend.

Lunde said, "After such liquidations, the market generally stagnates in the short term and traders behave cautiously; however, these periods often signal the bottom points." He emphasized that there was a record drop of 50,000 BTC (approximately 18.6%) in open positions for Bitcoin (BTC) futures on October 10, marking the most significant single-day decline since August 2023. During this process, $16.7 billion worth of leveraged long positions were liquidated. Additionally, BTC futures on Binance traded at a 5.1% discount to the spot price.

According to the K33 report, a dramatic decline in leverage was observed in the altcoin market. The ratio of open positions in altcoin futures to market value decreased from 4.1% to 3.2%, recording the sharpest contraction in the last four years. This indicates an even larger leverage unwinding compared to the FTX collapse in 2022. Some assets nearly plummeted to zero; for instance, the price of Cosmos (ATOM) briefly dropped from $4.06 to $0.001 on Binance. Exchanges implemented automatic position closures to prevent chain liquidations. Lunde noted that this incident has wiped out many traders from the market and some funds may have gone bankrupt.

K33 Research emphasized that after the significant collapse, a 'market cleansed of excessive leverage and structurally more robust' has emerged. Lunde expressed that a window of opportunity for Bitcoin accumulation has opened in the coming weeks, and a gradual recovery process may begin with the normalization of funding rates.