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Cryptocurrencies Show up for 35% Gains After Majority of Traders Capitulate

Mon, 06/20/2022 - 14:40
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Arman Shirinyan
Cryptocurrencies are slowly recovering after worst weekend of trading in industry's history
Cryptocurrencies Show up for 35% Gains After Majority of Traders Capitulate
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Disclaimer: The opinion expressed here is not investment advice – it is provided for informational purposes only. It does not necessarily reflect the opinion of U.Today. Every investment and all trading involves risk, so you should always perform your own research prior to making decisions. We do not recommend investing money you cannot afford to lose.

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As U.Today previously mentioned, the past weekend saw one of the worst trading days in the history of digital assets history as large institutional investors dumped thousands of Bitcoins on an illiquid market and caused a plunge below the 2017 ATH, which was previously considered an unbreakable support zone.

The biggest gainer in the top 100 cryptocurrencies sorted by market capitalization is the Synthetix decentralized finance protocol that offers exposure to crypto and non-crypto assets via synthetic tokens.

CMC Data
Source: CoinMarketCap

The platform's underlying token, SNX, gained more than 66% to its value in the last 24 hours while being up more than 100% some time ago. Such a strong rise in the token's price is most likely tied to the skyrocketing funding rate of SNX following the rise in the shorting volume.

Other cryptocurrencies like AAVE and AVAX are also showing double-digit gains as traders get back to using decentralized finance platforms.

Investors are betting on assets with lower capitalization

The recovery of the market is often followed by greater inflows to assets with lower capitalization like STEPN, 1INCH and others. The main reason is the maximization of profit thanks to the greater growth pace on assets with lower liquidity and volume.

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The main drawback of such a strategy is tied to greater risks since, in the case of a reversal, the lowcaps will lose more from their value compared to top-tier cryptocurrencies like Bitcoin or Ethereum, which remain extremely volatile compared to more traditional types of assets like stocks and bonds.

At press time, Ether and Bitcoin are trading at $1,124 and $20,470, respectively, gaining around 2-3% to their values in the last 24 hours.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.