Bitfinex Issues Caution Amid Altcoin Rallies, Flags ‘Concerning’ Market Signals
Bitfinex has issued a warning amid significant rallies in altcoins like SUI and AAVE, highlighting concerning market signals. The exchange reports that despite rising prices, open interest (OI) levels have reached new highs, indicating potential risks. It advises caution as Bitcoin's rally may lead to a period of consolidation, with altcoins outside the top 10 facing possible corrections.
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A leading cryptocurrency exchange’s research division is advising traders to monitor open interest (OI) levels when dealing with altcoins.
In its latest report, Bitfinex highlights that a decrease in OI has contributed to significant rallies in several altcoins, including SUI and AAVE.
According to the report, “Risk-on sentiment and the ease of moving altcoins due to the drop in OI have played a part in propelling altcoins such as SUI and AAVE, which have surged by 100% since their respective lows in August and September.”
Despite these rallies, Bitfinex identifies a concerning trend in the altcoin market: open interest has hit a new high of $11.48 billion, surpassing the previous high of $10.74 billion on August 19th. This is happening even though the OTHERS index (which tracks altcoins outside the top 10 by market cap) has not reached new highs.
As Bitcoin (BTC) spearheads a broader market rally, Bitfinex suggests that a period of consolidation may be imminent after BTC failed to sustain a breakout above the $65,000 level.
“Following the 22% rise in BTC, a cautionary approach is advisable. The price could potentially enter a consolidation phase near current levels, similar to what we’ve observed in previous rallies that began with spot buying, followed by activity in the perpetual and futures markets.”
Given this outlook, Bitfinex forecasts a potential “correction” in the altcoin market, specifically among altcoins outside the top 10 by market capitalization.
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