Latest Bitcoin Top Is Different From 2021 Peak, Analyst Explains Why

Keshav Verma

1 year ago

3 mins read

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An analyst has explained why the recent high in Bitcoin has experienced different market conditions than those observed during the 2021 bull run peak.

Bitcoin Liquidations Have Been Short-Dominated In Recent Market High

In a new post on X, on-chain analyst Checkmate pointed out how the latest 2024 high achieved following the spot exchange-traded fund (ETF) inflows has a major difference when compared to the 2021 peak.

The difference lies in the trend registered on derivatives markets. Below is the chart shared by the analyst that shows the trend in the dominance of long liquidations in the sector over the last few years.

The distribution of liquidations on derivatives market over the last few years | Source: @_Checkmatey_ on X

“Liquidation” here naturally refers to the act of forceful closure that any derivatives market contract undergoes on an exchange when it accumulates losses of a certain degree.

The risk of a contract getting liquidated becomes higher, and the more volatile the asset price gets. During sharp rallies and crashes, huge amounts of liquidation can pile up in the market.

From the chart, it’s visible that as the rally in the cryptocurrency had occurred this year, the short holders had been taking a beating. This was only natural as surges pile up losses for these investors betting on a decline, so price growth as rapid as the one witnessed would have pushed many of these contracts toward liquidation.

Interestingly, the scale of the short dominance maintained throughout the run, implying that the investors didn’t quite believe the run would continue any further at every point of the rally, so they bet against it.

This has also remained true in the recent stagnation following the top, as short liquidations have outweighed the long ones even though the price has decreased.

As is apparent in the graph, the 2021 peaks saw a different trend. Longs were getting liquidated as Bitcoin topped out during both the first half of the 2021 peak and the second half.

In those periods, the investors had become too greedy and were only betting on the rise to continue even when the asset had slowed down. This greed appears to haven’t overtaken the market in the bull run.

While the current Bitcoin rally differs from the last one in this metric, analyst Maartunn has pointed out in an X post another indicator where the trend appears to be similar to that observed in previous peaks.

Looks like the value of the metric has been plunging in recent days | Source: @JA_Maartun on X

This indicator is the Coin Days Destroyed (CDD), which basically tells us about the scale of dormant coin movement that’s happening in the market right now. It would appear that this metric had attained very high levels recently.

“Coin Days Destroyed has probably peaked,” says Maartunn. “Bitcoin’s price typically reaches its peak around the same time.” It should be noted that although this has been true for some of the tops, the 2021 peak took months to form after the metric peaked.

BTC Price

At the time of writing, Bitcoin is floating around $62,200, up more than 5% over the past week.

BTC appears to have been sliding off in the last few days | Source: BTCUSD on TradingView

Featured image from Shutterstock.com, checkonchain.com, CryptoQuant.com, chart from TradingView.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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