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The cryptocurrency market’s total value rebounded sharply today, erasing a large portion of the previous losses. On March 21st, the crypto market value surged by 13% to $2.498 trillion after dropping to a two-week low of $2.208 trillion the day before. The leading cryptocurrencies in gains were Bitcoin and Ethereum, which rose approximately 12.5% and 16.5% during the same period.
Bitcoin and the Crypto Market
The recovery in the crypto market occurred in response to persistent enthusiasm for the upcoming Bitcoin halving event in the ecosystem. The market maintains its optimism about Bitcoin’s upward potential before and after the halving event scheduled for April. This optimism continues despite the cryptocurrency’s 17.5% correction and a recent slowdown in inflows to spot exchange-traded funds.
For instance, Dovey Wan, the founder of investment firm Primitive Ventures, interprets the ongoing Bitcoin price decline as the second phase of a three-stage cycle related to halving events, which have historically seen Bitcoin undergo 30% to 50% corrections followed by strong upward recoveries.
Furthermore, Standard Chartered predicts that the Bitcoin price could rise to $150,000 by the end of 2024, partly due to increased institutional investments in spot ETF funds.
What’s Happening in the Futures Market?
The volatility in the crypto market triggered a significant number of short position liquidations in the futures market, reaching nearly $180 million within just 24 hours. Bitcoin’s short positions led this liquidation frenzy with a total of $65.50 million, followed by Ethereum with $47.38 million in liquidations.
As noted by the crypto trading analysis platform Coinalyze, despite the challenges faced by short sellers, open interest in the crypto futures market is on the rise.
Open interest, which represents the total value of outstanding futures contracts on exchanges, is drawing attention as a factor for market activity and investor sentiment. An increase in open interest typically indicates higher market participation and positive investor sentiment.
