Diverging liquidation trends reveal a growing risk disparity between BTC and altcoins following the ETF launch.
Ever since spot Bitcoin [BTC] ETFs came out, the market has shown a clear separation between altcoins and Bitcoin, specifically regarding liquidation behavior.
As Bitcoin's price increased, short liquidations surged. Meanwhile, altcoins faced heavy long liquidations as investors overestimated a rally.
Binance's Cumulative Liquidation Delta (CLD) highlights this contrast. Bitcoin short liquidations exceeded longs by $190 million, showing strong bullish pressure that forced short sellers to exit.
Altcoins faced the opposite trend. During the same period, long liquidations exceeded shorts by nearly $1 billion.
This reveals a sharp market imbalance. Investors correctly backed Bitcoin's bullish case, but wrongly expected an "altseason" to follow.
Instead of rebounding, altcoins kept falling. Over-leveraged long positions were wiped out, especially as volatility increased and support failed.
While leveraged risk-on assets struggled, Bitcoin gained institutional traction through ETF inflows.
Since December 2024, the gap in liquidations has widened. Altcoin liquidations have greatly exceeded Bitcoin's by various metrics.
This trend highlights a growing risk divide in crypto. Bitcoin is viewed as a safer, institutional-grade asset, while altcoins remain speculative and prone to deeper losses.
ETF inflows into Bitcoin have amplified this gap. As Bitcoin attracts capital and short sellers get squeezed, altcoin buyers are getting trapped.
The anticipated altcoin season has led to billions lost in liquidated long positions.
These liquidation trends reflect a shifting market. Altcoins struggle to match Bitcoin's demand-driven rally. The sentiment remains selective, favoring BTC over broader market optimism.
Unless capital starts flowing back into altcoins, the gap will keep expanding. Leverage remains risky at this crucial stage, especially outside Bitcoin.