Crypto traders are still on edge Monday morning as markets recover from Friday’s unprecedented meltdown.
That’s according to Nick Forster, CEO and founder of analytics firm Derive, who said that options data shows traders playing defence.
Volatility has spiked in Bitcoin and Ethereum markets, “signalling expectations of sustained turbulence and a choppy road ahead,” Forster said in a research note on Monday.
More than $19 billion in leveraged positions were liquidated on Friday in a market-wide flash crash triggered in part by US President Donald Trump’s renewed tariff threats against China.
Bitcoin plunged 12%, Ethereum dropped 20%, and Solana sank nearly 25% before stabilising.
Altcoins, such as Dogecoin, were hit hardest, with some experiencing a drop of over 50%.
“Liquidity evaporated across crypto futures as market makers pulled quotes to avoid breaching risk limits. With order books thinned out, forced liquidations and panic selling had an outsized impact, fueling a self-reinforcing cascade,” Forster said.
Forster isn’t the only cautious voice.
Illia Otychenko, lead analyst at crypto exchange CEX.IO, told DL News that “there are still bearish signals, suggesting we could see either a deeper correction or a period of slower recovery in the mid-term.”
The selloff was one of the “largest deleveraging events ever” as excessive leverage and crowded long positions were flushed with several momentum indicators flashing overbought conditions, he said.
“For now, Bitcoin appears to be in a healthier position than it was before the drop.”
