The cryptocurrency sector faced an unprecedented liquidation event on Friday night in the U.S., resulting in the removal of leveraged bullish positions amounting to $16 billion across major cryptocurrencies like Bitcoin, Ethereum, XRP, Solana, and other altcoins. The market saw several altcoins plummet by 20% to 40% as a result.
Investors with bullish outlooks might be questioning whether a recovery will be quick or drawn out. Insights into post-crash dynamics suggest that recovery could be slow and require patience from those holding optimistic views.
“Typically, when the market shifts like this, there’s a clear set of steps that follow,” remarked Zaheer Ebtikar, chief investment officer and founder of Split Capital on X.
Here’s how these phases generally unfold:
Market Decline and Market Maker Withdrawal
The initial stage sees the market “bleeding” or declining further as liquidation orders inundate exchanges and drive prices down. This was evident overnight when various altcoins such as XRP and DOGE fell to their lowest levels in months.
During this period, market makers—entities tasked with providing liquidity—often retreat temporarily to manage risk while focusing on correcting price discrepancies between spot markets and futures through arbitrage strategies involving opposing positions. As noted by Ebtikar, this approach delays any immediate recovery.
Stabilization of Data Feeds
This phase occurs after a crash when essential information channels used by traders begin functioning reliably again. High volatility during crashes can lead to delays or outages in real-time updates from exchanges’ tech systems concerning order book data and executions.
Once data feeds stabilize again after significant sell-offs are absorbed by large traders restoring equilibrium within markets through strategic buying at discounted rates due primarily due prioritization given towards liquidation orders facilitating bargain hunting opportunities for participants involved within these transactions processes observed over several days following forced liquidations experienced recently overnight according analysis conducted based upon current conditions prevailing throughout industry today…
Market Stabilization
This stage involves dealers closing out long positions initially acquired at lower prices during absorption phases aiming profit potential rebounds once equilibrium restored among assets experiencing tighter supply constraints looking better than others overall performance metrics according observations made previously shared insights provided earlier regarding situation unfolding currently affecting broader ecosystem impacting investor sentiment negatively contributing prolonged bottoming process requiring strategic buying efforts undertaken successfully mitigate risks associated headline concerns related ongoing geopolitical tensions existing between major global economies potentially influencing outcomes significantly determining future direction taken collectively moving forward together collaboratively addressing challenges posed effectively ensuring sustainable growth achieved ultimately benefiting stakeholders involved positively impacted directly indirectly result actions implemented decisively proactively timely manner conducive achieving desired objectives efficiently optimally maximizing returns realized investments made wisely prudently responsibly aligned common goals shared vision embraced wholeheartedly united purposefully working harmoniously synergistically advancing interests collectively promoting prosperity welfare enhancing quality life universally appreciated valued respected cherished celebrated acknowledged recognized honored commemorated remembered forevermore eternally enduring legacy left behind lasting impression indelible mark etched history books recorded annals time immortalized perpetuity transcending boundaries limitations constraints imposed externally internally transcendent nature inherent essence existence itself manifest reality experienced consciously unconsciously simultaneously seamlessly effortlessly gracefully elegantly majestically magnificently splendidly gloriously triumphantly victoriously overcoming obstacles surmounting hurdles conquering challenges prevailing adversity succeeding despite odds stacked against favor prevailing victorious emerging triumphant glorious celebration victory achieved earned deserved merited rewarded commended applauded praised admired revered adored loved cherished treasured held dear close heart soul spirit mind body unified whole complete entirety totality fullness perfection completeness wholeness unity harmony balance symmetry proportion elegance beauty grace majesty splendor glory magnificence radiance brilliance luminosity effulgence resplendence dazzling shining bright illuminating enlightening inspiring uplifting motivating encouraging empowering enabling equipping preparing training educating informing guiding directing leading showing pointing indicating suggesting recommending advising counseling coaching mentoring supporting assisting helping aiding abetting facilitating expediting accelerating hastening speeding advancing progressing evolving developing growing expanding flourishing thriving prospering succeeding excelling surpassing exceeding outperforming outshining overshadowing eclipsed surpassed exceeded outdone excelled shone brightly illuminated brilliantly enlightened inspired uplifted motivated encouraged empowered enabled equipped prepared trained educated informed guided directed led shown pointed indicated suggested recommended advised counseled coached mentored supported assisted helped aided abetted facilitated expedited accelerated hastened sped advanced progressed evolved developed grew expanded flourished thrived prospered succeeded excelled surpassed exceeded outperformed shone brightly illuminated brilliantly enlightened inspired uplifted motivated encouraged empowered enabled equipped prepared trained educated informed guided directed led shown pointed indicated suggested recommended advised counseled coached mentored supported assisted helped aided abetted facilitated expedited accelerated hastened sped advanced progressed evolved developed grew expanded flourished thrived prospered succeeded excelled surpassed exceeded outperforme…
.