CRYPTO MOVERS AND PRICES
CRYPTO STORY OF THE DAY
Crypto Is Rallying Lead By Ethereum (ETH) - We See Evidence That ETH Did Not See The Same Degree Of Deleveraging On Derivatives Platforms As Bitcoin (BTC) Did 1-Month Ago And Remains Vulnerable To Sharp Pullbacks.
ETH and BTC have had different experiences over the last month from a leverage perspective. In BTC, the massive March 11 to 13 deleveraging saw open interest drop by over half and funding rates flip to where shorts were paying longs in perpetual swaps universally.
While ETH also saw open interest drop by over 50% in that same sell-off, perpetual funding rates acted much differently. While shorts paid longs for the better part of a month on XBT perps, that switch never occurred in ETH. In fact, longs have continued to pay shorts in ~90% of periods since March 11 on BitMEX, with funding rates frequently pushing over 100% annualized.
Crypto Takeaway: While the March 11-13 sell-off in ETH was indeed violent, perpetual funding rates paint a picture of a recovery that remains built on leverage. Furthermore, the fundamental picture in ETH remains particularly unclear. The ETH development community has been steadfast in an 'upgrade' to Proof-of-Stake in 2020, a move we have hypothesized is likely to lead to projects building redundancies on other chains. Simply, a rally supported by leverage leaves an asset more vulnerable to violent pullbacks. While over the last weeks we have presented evidence that the leverage situation has been sufficiently washed out in BTC, we cannot say the same for ETH.