Cryptocurrency leverage trading is sucking altcoins dry?

Ever wondered what is holding down the price of your altcoin bag? While that is a valid question, it requires more than an article to answer. However, we are going to try to explain what are a few causes of your struggles. Cryptocurrency leverage trading is one of the main reasons altcoins are bleeding at the moment.

How so?

Well, let’s start at the very beginning.

Remember the times without cryptocurrency derivatives?

During the biggest bull run in the world’s history in 2017, there were altcoins skyrocketing so ridiculously that even the most optimistic minds couldn’t wrap their heads around what was happening. Bitcoin’s market dominance was relatively low at 32%. Meanwhile, all kinds of new projects emerged to take their piece of the pie. ICOs were blooming and every problem seemed to be solvable with blockchain.

The reason for it was that, in order to participate, investors needed to own the asset. Derivatives simply weren’t so popular back in the day. Therefore, the influx of new capital was clearly visible all around the market. People were exchanging their fiat for crypto which resulted in more buy than sell orders. Consequentially, the price increased.

Of course, BitMEX is present since 2014, but people just weren’t much interested in using it. Instead, some other trading platforms played the main roles in the rising market. Crypto-to-crypto exchanges like Ploniex, Bitfinex, or Bittrex ran the game. Nevertheless, some of them are now nearly forgotten. Most probably because traders moved to the derivatives market.

Cryptocurrency leverage trading grand entrance

Then, 2018 changed everything. Crypto derivatives trading platforms got the traction and investors started migrating towards them. Since most of them don’t support many coins, people needed to sell their alts for BTC to participate. That way, the liquidity of altcoins deteriorated as Bitcoin’s dominance went above 50% yet again.

Simultaneously, with no influx of the new capital, altcoins went dry. With all the liquidity transferring to the likes of BitMEX, old-fashioned crypto exchanges became depopulated. Traders are shorting BTC with high hopes of materializing their risk taken with leverage.

Do altcoins have a future?

We have already presented the problem that cryptocurrencies have with new users in regard to the unfriendly infrastructure. Nevertheless, not only the infrastructure is to blame. Obviously, there is only a small percentage of investors in the game for what BTC was meant to be. Evidently, even a smaller percentage is using crypto as a means of payment.

If this weren’t the case, altcoins would have a much bigger liquidity pool since their transactions are much cheaper than BTC’s. Therefore, simply put, traders are speculating on potentially the most rewarding platforms. These platforms don’t care about the majority of altcoins. They care only about profit. Just like these mentioned traders.

So, all of you holding these large bags of Cardano, Ravencoin or god knows what else, will have to remain patient. If patience ever digs you out of your losses, it is going to be when Bitcoin reaches a new all-time high. That will be the time when traders, satisfied with BTC profits, will turn towards alts for more. Since there is no derivatives market for the majority of altcoins, those investors will have to visit the regular exchanges once again. The trading volume will rise inversely proportional to Bitcoin’s market dominance.

These times, my friends, are called bull markets.