Glassnode co-founders disclose that the crypto crash was brought about by forced seller unwind, rather than market sentiment. This mechanical unwind is a sign of a precipitous turnaround.
The crash of Bitcoin and the crypto market as a whole has nothing to do with the evolving attitude, according to Glassnode co-founders Jan Happel and Yann Allemann, analysing under the Negentropic alias on X.
They reveal that one forced seller mechanically unwound their position, triggering the downward trend since October 10.
This is a limited, systematic decrease in risk by a single harmed liquidity provider or fund rather than a natural market movement.
Analysts observe 21 days of steady toxic flow, marked by sell-offs at the same timestamps and across thin market venues.
This inflexibility and absence of typical market volatility patterns suggest mechanical trading rather than discretionary trading or a general market meltdown.
The abnormal MACD and RSI indicators highlight forced selling in the absence of larger financial crises, such as credit crises or ETF outflows.
This crash is devoid of standard signs of stress, with ETFs continuing to grow inflows, altcoins holding up, and Ethereum doing the same. outperforms Bitcoin. These circumstances disprove a systemic sell-off, emphasising the solitary character of this event.
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Signs Point to Sharp Rebound Post-Unwind
Experts observing the immediacy and pace of the sell-off suggest that forced, price-insensitive liquidation is driving it, and such selling cannot continue for long.
The gradual disinventory implies scant inventory or a requirement that, when depleted, might create a sudden market shock.
The procedure resembles past liquidation cleanses, in which the market realises bankruptcies and vulnerability to failed counterparties only after the fact.
This offloading seems to be an event rather than a reactionary one, a limited thing in an overall optimistic macro cycle.
According to the co-founders of Glassnode, it is not a trend break or a capitulation but a mechanical unwind via a fractured market. After it is done, the market is poised to make a more powerful recovery.