Market dips are a common occurrence in the volatile world of cryptocurrency. While they can seem alarming, these pullbacks are often just part of the market’s natural cycle.

Understanding what causes them and how to react can turn temporary losses into long-term gains.

A Leverage Flush, Not a Crash

The market dip we experienced this week was more of a leverage flush than a genuine crash. Here’s how it unfolded:

December 7th: The Sell-Off Begins
The trouble started with Coinbase traders initiating a significant sell-off, notably one hour before the broader market began its sharp decline.

• A Chain Reaction Unleashed
  The initial wave of selling pressure triggered a liquidation cascade. As overleveraged positions were hit, the market saw an acceleration of forced liquidations.

• Key Liquidation Zone Reached
  Once the market hit critical liquidation levels, margin calls and position closures came in fast and hard.

• Stop-Loss Triggers Amplified the Sell-Off
  Automated trading systems kicked in, activating stop-loss orders that compounded the downward spiral.

What This Means for You
While this dip may have seemed alarming, it was largely driven by technical market dynamics rather than a deterioration of underlying fundamentals.
Staying informed and maintaining a long-term perspective remains key in such volatile environments.

How to Stay Informed and Spot the Next Similar Dip

Keep an eye on the Funding APR Heatmap. You can see ours below👇

The funding rate is a critical metric in futures trading, representing periodic payments exchanged between long and short traders to keep contract prices aligned with spot prices. Here's how it works:

How the Funding Rate Works

• Positive Funding Rate: Long traders pay short traders, reflecting a bullish market sentiment.

• Negative Funding Rate: Short traders pay long traders, indicating bearish market sentiment.

Interpreting the Heatmap

The funding rate heatmap visually highlights market sentiment through APR levels:

• Red Areas: Indicate a high positive APR, signaling an overheated market with excessive bullish sentiment. Be cautious, as corrections often follow.

• Blue/Green Areas: Indicate a negative or low APR, suggesting bearish sentiment and potential buying opportunities.

How to Use the Funding Rate in Your Strategy

1. Spot Market Extremes: Watch for high positive APRs. These often signal an overly bullish market prone to corrections.

2. Identify Entry Points: Look for negative APRs, which can suggest favorable buy zones.

3. Gauge Market Sentiment: Use the heatmap to track shifts in sentiment and spot potential market reversals.

👉 Create your own heatmap on Velo, or join our Telegram canal to stay tuned as we’ll keep you updated with our heatmap insights.
Let anticipate the next dip together!

What We Have Bought During This Dip

XRP:
The launch of XRP's stablecoin is just around the corner, positioning XRP for increased visibility and market relevance.
With XRP’s established network of financial partnerships and its focus on cross-border payments, the stablecoin launch could act as a major catalyst, boosting adoption and driving renewed interest in the asset.
As of now, RLUSD got the regulatory approval and the exact launch date is just around the corner.

Price of XRP during the dip: ≃$2
Price of XRP now (4 days later): $2.40 (+20%)

SUI:
SUI has weathered the recent market dip better than many other coins, reflecting strong investor confidence and robust market fundamentals.
SUI’s resilience during downturns positions it as a promising long-term investment in the blockchain space.

Price of SUI during the dip: ≃$3.6
Price of SUI now (4 days later): $4.71 (+30%)

ONDO:
ONDO has emerged as a Twitter favorite, gaining significant traction among the crypto community. In the world of cryptocurrencies, marketing and hype play a crucial role in
driving a coin's visibility, attracting investors, and creating network effects.

With ONDO's strong social media presence and active community engagement, it stands out as a project with high speculative potential.

Price of ONDO during the dip: ≃$1.6
Price of ONDO now (4 days later): $1.89 (+18%)

The recent dip, driven largely by leveraged positions and liquidation cascades, serves as a reminder that volatility is inherent in the crypto markets.

However, the rapid market flush also creates opportunities for well-positioned investors.

By keeping a close eye on tools like the Funding APR Heatmap and monitoring global market indicators, you can stay prepared for the next shift and make informed decisions moving forward.

Stay informed,
TheCryptoPicks ❤️