On-Chain Metrics Revealed Warning Signs Before the 10% Crypto Market Dip

Story Highlights

• Analysts reveal ignored warning signs before the sudden dip in market value.

• Strong buying activity indicated potential for market slowdown and correction.

• $150 Million long liquidations in 1.5 years caused sharp market volatility.

After yesterday’s surge, the crypto market saw a sudden 10% dip, dropping to $3.57 trillion, leaving many wondering if on-chain metrics had provided any warning signs. CryptoQuant analyst Maartunn says the warnings were there, but many traders overlooked them. This sudden drop led to large liquidations, worrying investors with long positions.

Key Warning Signs Ignored

Maartunn highlighted several key indicators pointing to a potential drop. According to Maartunn one of the main indicators was Binance’s Net Taker Volume, which showed strong buying activity. While this might look positive at first, it hinted that the price rise wasn’t stable and could slow down soon.

📉 Yesterday’s -10% dip had some wondering: “Did on-chain indicators see it coming?” 🤔

Yes, here’s what flagged it:

1/ Net Taker Volume (Binance): Strong buying activity signaling potential slowdown. 👇 pic.twitter.com/eaQz4QtW3C

— Maartunn (@JA_Maartun) December 6, 2024

Leverage was another major factor. Maartunn explained that open interest went up by 15%, showing that the market was relying more on borrowed money. While this helped push prices higher, it also made the market more risky, especially as greed took over.

The Crypto Fear & Greed Index was another warning sign, showing that the market was deep in greed. At the same time, retail demand jumped by 30% over the last 30 days, reaching its highest level in four years. Together, these metrics underscored a market poised for a correction.

Long Liquidations Hit Record Highs

As Maartunn explained, the result of these factors was inevitable a massive wave of liquidations occurred. Over $150 million worth of long positions were liquidated, marking the highest long liquidation event in at least 1.5 years.

This triggered a flash crash of 10%, catching many investors off guard and leading to heightened market volatility.

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