Data shows the altcoin indexes have made a sharp recovery against Bitcoin recently as they have kicked 2023 off to a great start.
Large Cap And Small Cap Altcoins Saw Flat Returns In The Past Month
According to the latest weekly report from Arcane Research, several alts have seen large short squeezes in recent days. The “altcoin indexes” here refer to groups of coins clubbed together on the criteria of market cap. The benefit of these indexes is that the performance of the different market sectors can be easily tracked using them.
There are three main indexes: the “small caps,” the “mid caps,” and the “large caps.” As their names already suggest, each of these represents the three major sizes of altcoins.
Now, here is a chart that shows how these alt indexes have performed against each other, as well as vs. Bitcoin, during the last 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 displayed in the above graph, the past month was almost flat for Bitcoin as the crypto registered just 1% of profits in this period. BTC didn’t go down much during this time, as it mostly stayed around the 0% line. On the other hand, the altcoin indexes did deviate more significantly from a flat curve and were all down more than 5% in the middle of this period (which coincided with the end of 2022).
However, these coins have experienced a very strong 2023 so far and have recovered from these losses. The large caps and the mid-caps are right back with Bitcoin, as their returns over the past 30 days are now 0%.
The small caps had taken an especially brutal beating by the end of last year, so even the good performance in 2023 hasn’t been enough to erase their losses, as they sit 5% underwater for the month.
Still, there has been a marked recovery across all the altcoin indexes recently. “In essence, the sharp gains seen in various altcoins in the last week have predominantly been fueled by illiquid markets and a short structural squeeze,” explains the report.
The below chart shows the volume data for the daily short liquidations in the crypto derivatives market over the last couple of 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’s apparent that December didn’t see that high short liquidation volumes, but the past few days have observed consistently frequent squeezes.
At the time of writing, Bitcoin is trading around $17,300, up 3% in the last week.
The crypto has seen an overall uptrend in the last few days | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Arcane Research