First Mover Americas: Altcoin Crash May Be on the Cards

(CoinDesk)

This article originally appeared in , CoinDesk’s daily newsletter putting the latest moves in crypto markets in context. .

(CoinDesk)

Bitcoin (BTC) reversed Monday’s decline to three-month lows under $25,000 during Asian trading hours, jumping back to around $26,000 as open interest on Binance, Bybit, OKX and Deribit fell to $4.8 billion from $5.05 billion. The decline in open interest suggests short traders were abandoning their bearish bets in what’s known as a short squeeze. The price recovery may remain capped due to a lack of immediate bullish catalysts. The bitcoin spot ETF optimism has faded, with observers shifting focus to the impending liquidation of FTX’s altcoin holdings.

An altcoin crash is coming, with around $3.4 billion worth of crypto tokens likely to be sold by bankrupt exchange FTX, according to Matrixport. FTX wishes to sell $200 million worth of crypto assets a week in order to return fiat currency to users, which would mean an overhang for altcoins for the remainder of the year. “Crypto venture capital (VC) funds are also under immense pressure to return funds to their investors,” Markus Thielen, Matrixport’s head of research, wrote in a Monday report. “Those VC funds are likely to remain as crucial sellers of altcoins and must cash out.”