According to network analysis provider Glassnode, the cryptocurrency market correction at the end of February may have eliminated the undue influence of the markets.
On March 1, Glassnode released a report analyzing the recent cryptocurrency, which was the second major correction for cryptocurrencies since it pushed the markets to new all-time highs in late 2020.
Glassnode notes that the crisis peaked with a 25% drop from an internal peak of $ 58,300 to $ 43,343. Thus, the move was weaker than the January decline, which saw a retracement of nearly 30% from $ 42,000 to below $ 30,000.
The analysis provider suggested that these reversals are generally positive for the cryptocurrency markets, and links the recent correction to liquid debt positions held by risky speculators:
“Major market corrections are positive events as they eliminate speculation, influence, weakness in the hands, and faith in the test-taker.”
The report added that many of the major market indicators were reset as bitcoin prices found new support, including open interest rates for futures contracts, futures funding rates, and prices for Grayscales investment products.
Futures open interest, the total number of outstanding contracts that were not settled, fell by about $ 4 billion, or 22%, from $ 18.4 billion. Glassnode also commented on the notable constant funding rates for futures, which also dropped to near zero, which may indicate traders are not ready to take short trades, stating:
“Previous combinations of open interest rate cuts and financing interest rate adjustments indicate an influx of speculative trading.”
However, the report indicated that open interest is still hovering around $ 2.5 billion from the previous peak of $ 3.9 billion on Feb.21, which means there is still significant bargaining power in the market.
Glassnode also indicated that Grayscales Bitcoin Trust shares are trading at a discount to spot market rates for the first time ever, with investors paying a roughly 4% discount to access BTC through the Grayscales Trust.
She added that competing products such as ETF Canada’s Purpose could lower Grayscale premiums as more institutional products enter the market and arbitrage opportunities are closed.
As of this writing, bitcoin prices have risen 5.3% in the last 24 hours, with BTC currently trading at $ 49,200.