In its recent evaluation, Wintermute, a cryptocurrency market maker, observed that as the year comes to an end, the cryptocurrency market is operating within a tighter range but shows greater resilience compared to earlier periods.
The firm noted that leadership in the market is increasingly dominated by Bitcoin (BTC) and Ethereum (ETH), while alternative cryptocurrencies are lagging behind.
Wintermute’s macroeconomic analysis revealed that downward pressure on crypto markets intensified at the start of last week. Midweek saw Bitcoin dip below $85,000 and Ethereum fall beneath $3,000. These fluctuations triggered another wave of liquidations; approximately $600 million worth of positions were closed out on Monday alone, with around $400 million liquidated each day on Wednesday and Thursday. The market displayed significant volatility as attempts for upward movement were swiftly countered by selling pressure. However, later in the week saw a reduction in volatility with Bitcoin gradually recovering towards the $90,000 mark.
The company highlighted that as we approach year-end festivities, there’s a tightening in market structure with Bitcoin’s dominance increasing once more—reinforcing trends observed during the latter half of this year. In contrast, altcoins remain comparatively weak due to an active token lock-up schedule coupled with supply pressures.
Based on its transaction flow data, Wintermute indicated renewed buying interest among major cryptocurrencies. While Bitcoin has sustained this buying momentum for some time now, similar patterns are emerging for Ethereum as we near year’s end. Institutional investors have been consistently adopting long positions since summer while retail investors appear to be exiting altcoins in favor of leading assets like BTC and ETH—a rotation aligned with prevailing sentiment suggesting “Bitcoin should lead first.”
Furthermore, Wintermute pointed out that although spot purchases of key assets provide a more stable price foundation overall; primary price discovery continues predominantly through derivatives markets. This scenario results in sharp intraday fluctuations due to ongoing net purchases in BTC and ETH alongside liquidation events from over-leveraged positions. Tight funding rates along with futures contracts indicate persistent uncertainty within options trading environments where some participants anticipate retracements back toward mid-$80k levels while others expect returns to previous highs.
From a medium- to long-term perspective,Wintermute remarked positively about developments from institutional finance sectors concerning their integration into crypto ecosystems despite existing volatility challenges; traditional finance players are entering this space cautiously yet steadily which typically signifies long-term capital flows known for being “sticky.” It was suggested that such integration could bolster prices over time even though short-term upward momentum may remain constrained.
Concluding its assessment,Wintermute expressed expectations for continued volatile yet sideways movements approaching year-end driven by low liquidity conditions coupled with diminished trading desk activities.The past week reaffirmed perceptions surrounding consolidation phases within crypto markets where sharp declines persist but are curtailed via rapid liquidations resulting again into capital inflows targeting highly liquid assets.Both Bitcoin and Ethereum stand out as principal risk bearers whilst broader altcoin sectors continue grappling under supply pressures paired alongside reduced risk appetites among traders.
*This does not constitute investment advice.