Labor Day Leverage Check
- On Tuesday, the market experienced cascade of liquidations as nearly $4.0 billion of long positions across the entire crypto market were wiped out. Approximately $1.0 billion of $BTC long positions and $855 million of $ETH long positions were liquidated.
- Tuesday’s liquidations were possibly exacerbated by the leverage embedded in the Ethereum market and the wider altcoin universe.
- $BTC and $ETH found ample buying support above their 200-day moving averages and continue to show resilience at the time of writing.
- The positive trend in Bitcoin price action continues to be driven by decreasing supply – with demand coming from long-term investors.
- Ethereum is experiencing high levels of supply burn given high network activity from NFTs.
- Bottom Line: The macro and on-chain pictures remain consistent, and therefore we believe these mid-cycle liquidations are good opportunities to consolidate positions.
- El Salvador Adopts Bitcoin: El Salvador makes history as it becomes the first country to make Bitcoin legal tender. While there are plenty of reasons to be skeptical, we think this opens the door for other countries to adopt Bitcoin as legal tender or a reserve asset.
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