Data shows that altcoin indices have recently rallied against Bitcoin as they have kicked off 2023 to a great start.
Large-cap and small-cap altcoins posted flat returns over the past month
According to the latest weekly report of arcane investigation, several alternatives have seen large short contractions in recent days. “Altcoin indices” here refer to groups of coins lumped together on market capitalization criteria. The benefit of these indices is that the performance of different market sectors can be easily tracked using them.
There are three main indices: “small caps”, “mid caps” and “large caps”. As their names already suggest, each of these represents the three main altcoin sizes.
Now, here’s a chart showing how these alternative indices have performed against each other, as well as against Bitcoin, over the past 30 days:
Looks like the alts were deep inside negative territory not too long ago | Source: Arcane Research's Ahead of the Curve - January 10
As shown in the chart above, the past month was almost flat for Bitcoin, with the crypto posting just 1% of the gains in this period. BTC did not go down much during this time, as it mostly hovered around the 0% line. On the other hand, altcoin indices deviated more significantly from a flat curve and fell more than 5% in the middle of this period (which coincided with the end of 2022).
However, these coins have seen a very strong 2023 thus far and have rebounded from these losses. Large and mid-caps are back with Bitcoin, as its returns over the last 30 days are now 0%.
Small-caps took an especially brutal beating late last year, so even strong performance in 2023 hasn’t been enough to erase their losses, as they’re 5% underwater for the month.
Still, there has been a marked recovery across all altcoin indices recently. “In essence, the strong gains seen in various altcoins over the past week have been driven predominantly by illiquid markets and a brief structural contraction,” the report explains.
The chart below shows the volume data for daily short liquidations in the crypto derivatives market over the past few months.
The value of the metric seems to have spiked in recent days | Source: Arcane Research's Ahead of the Curve - January 10
From the chart, it is evident that there were no high and short liquidation volumes in December, but frequent and constant squeezing has been observed in recent days.
Bitcoin price
At the time of writing, Bitcoin is trading around $17,300, up 3% in the past week.
The crypto has seen an overall uptrend in the last few days | Source: BTCUSD on TradingView
Featured Image by Kanchanara on Unsplash.com, Charts from TradingView.com, Arcane Research
