Traders holding long positions in futures suffered significant losses due to falling crypto prices last week, with around $650 million in longs liquidated across derivatives exchanges since April 17, according to a report.
Binance and OKX saw the most significant volume at $234 million and $197 million, respectively, according to research by The Block.
Bitcoin (CRYPTO: BTC), the leading cryptocurrency by market cap, fell consistently throughout the week, with a 9.2% drop to around $27,300, while other cryptocurrencies like Ether (CRYPTO: ETH), Ripple (CRYPTO: XRP), and Polygon (CRYPTO: MATIC) also experienced a plunge.
The sell-off began on Tuesday, April 18, and has been linked to a lack of liquidity and a large sell order on Binance (CRYPTO: BNB).
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Coinbase (NASDAQ:COIN) noted on Friday that the correlation between Bitcoin and Ether returns has been falling since mid-to-late March, which could affect quantitative strategies that rely on cross-hedging.
Furthermore, funds can use Ether to hedge against less liquid altcoins.
Despite the recent market downturn, Bernstein analysts believe that the strong price action in Bitcoin this year, up 67% year-to-date, is a sign of a new cycle driven by the building of a scalable decentralized financial infrastructure, which will lead to the first wave of mainstream institutional participation in the market.
"The market still offers an attractive window to participate in this new cycle," the bank's note reads.
While skeptics argue that the market is driven by retail speculation, the bank contends that some speculation is bootstrapping real infrastructure creation.
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