This is a segment from the Empire newsletter. To read full editions, subscribe . Brutal week so far for altcoins. In the stock market, you generally look for a Santa Claus rally at the end of December into early January as a nice, green way to close out the year and welcome a new chapter. Whether we could see a similar thing in crypto is still up in the air. Right now it’s looking iffy. On the upside, altcoin leverage managed to hold through Dec. 5, but Monday saw the biggest daily long liquidation event since May 2021, as K33 analysts noted. Ouch. “Ever since the election, long bets have been rewarded. This dynamic allowed open interest to accumulate with a steadily growing long concentration. This growth is evident by looking at total open interest in altcoins relative to the total altcoin market cap,” they wrote. “This metric grew from 3.57% to 4.42% from the election until December 9, amidst a very high funding rate environment in December. [Monday’s] liquidation cascade saw altcoin leverage plunge by $12.8bn, reducing the relative altcoin leverage to 3.96%.” A look at open interest in altcoins To put those metrics into perspective, altcoin open interest marked the “biggest relative decline in altcoin leverage since the FTX collapse.” BitOoda analysts, following Monday’s sell-off, said that they expect more “sideways trading through year-end marked by periods of low liquidity and choppy price action.” And we very well may see that given the highly leveraged products and “exaggerated” price action moves. The good news, however, is that while this is a decently sized bump in the road, it doesn’t sound like it’s impacting the bullish 2025 outlook shared lately by many. Perhaps there’s still hope for a Santa rally. Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter . Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter . Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more. The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.
