coindesk.com
ter days of muted trading and crushed volatility, the crypto market came back swinging on Monday as cryptocurrencies with smaller market capitalizations rallied, outperforming the blue chips bitcoin (BTC) and ether (ETH).
Among the biggest gainers was FTT, the token of the crypto exchange that failed spectacularly in November, jumping 55% in the past 24 hours. (It’s still down 96% over the past year.)
Serum (SRM), the native token of the Solana-based decentralized exchange, surged 28% on the day.
ZIL, the Zilliqa blockchain project’s native token, increased 37%, while the native token of the Aptos blockchain (APT), known for its rocky launch and venture capital backing, gained 30%.
The sudden surge caught traders off guard betting on cryptocurrency prices to fall. In the past 24 hours, traders liquidated some $245 million of short positions, according to Coinglass data. Monday’s was the largest daily short liquidation since Nov. 10, when crypto exchange FTX’s agony before its ultimate demise stirred up price volatility in the crypto market.
A signal of traders’ extreme bearish positioning before Monday’s price increase was the funding rates for perpetual swaps of solana (SOL) sinking to 1,000% annualized rate. Then, SOL gained 20% and some $15 million of short bets were liquidated, according to Coinglass.
Historically, the surge of small cap tokens and memecoins has been an ominous sign for market participants. Often it preceded local tops for crypto prices before a correction, as traders rotated their gains from top digital assets to small projects then dumped on the market.
However, Kruger predicted that the price recovery in crypto will continue, comparing the present conditions to early 2019 after the crypto market bottom, but the stellar run for altcoins might come to an end.
“The extraordinary outperformance relative to BTC and ETH should be gone, as funding rates finally reset to normal levels on Monday night.”
“This is still a bear market and traders would do well to exercise caution,” he added.