Data shows the altcoin index has recovered rapidly against Bitcoin recently as it has started 2023 well.
Large cap and small cap Altcoins have seen flat returns over the past month
According to the latest weekly report from Arcane Research, some alts have seen big short squeezes in recent days. The “altcoin index” here refers to a group of coins that are combined in market cap criteria. The benefit of such an index is that the performance of different market sectors can be easily tracked.
There are three main indexes: “small cap,” “mid cap,” and “large cap.” As the name suggests, each of these represents three sizes of altcoins.
Now, below is a chart showing how these alt indices are performing against each other, as well as vs. Bitcoin, in 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 shown in the chart above, the past month was almost flat for Bitcoin as the crypto registered only 1% of its profits during this period. BTC did not drop much during this period, as it was mostly around the 0% line. On the other hand, the altcoin index deviated more from the flat curve and all fell by more than 5% in the middle of this period (which coincides with the end of 2022).
However, this coin has experienced a very strong 2023 and has recovered from this loss. Large caps and mid-caps immediately returned with Bitcoin, as the return in the past 30 days is now 0%.
Small caps have taken a brutal beating at the end of last year, so the good performance of 2023 has not been enough to offset the losses, as it is 5% underwater during the month.
Still, there has been a marked recovery in all altcoin indices recently. “In essence, the clear gains seen in various altcoins in the past week have been dominated by the illiquid market and the short structural squeeze,” explains the report.
The chart below shows 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 clear that December did not see short liquidation volumes, but the past few days have been under pressure.
BTC price
At the time of writing, Bitcoin is trading around $17,300, up 3% over the past week.
The crypto has seen an overall uptrend in the last few days | Source: BTCUSD on TradingView
Featured images from Kanchanara on Unsplash.com, charts from TradingView.com, Arcane Research