Altcoin is fluctuating on the brink: High funding ratio signals market correction potential

Recent market developments have shown that altcoins, which have attracted significant attention from investors, may face a period of upcoming turmoil. According to AMBCrypto's analysis, the combination of high leverage, increasing liquidity, and market volatility is creating a volatile situation for altcoin investors. The role of Bitcoin in the market downturn of Altcoin The sharp drop of $9,000 in Bitcoin (BTC) on November 5th caused a shock throughout the cryptocurrency market, wiping out nearly $1 billion in value. This BTC price drop has had a ripple effect, seriously impacting altcoins. Many altcoins, which had seen price increases in recent weeks, have experienced a sharp decline of nearly 10% following Bitcoin's strong correction. Warning signs for Altcoin investors AMBCrypto's analysis highlights the fragility of the current market. With altcoins achieving their highest funding ratio in nine months, the platform warns that these assets are at significant risk of liquidation. The market's increasing risk appetite and growing leverage usage have created a ripe environment for correction. The 30-day funding rate for perpetual futures contracts has skyrocketed to unprecedented levels, ranging from 4% to 6% per month. These high rates indicate an increasing number of leveraged positions, as traders bet on continuous price increases. However, historical data shows that such rapid price increases, along with high funding rates, often precede strong market corrections. Market prospects: The possibility of repeating the January correction Compared to the market momentum of January, AMBCrypto notes that similar conditions have led to a 15% decrease in altcoin prices earlier this year. The platform predicts a similar adjustment in the coming weeks. With increased liquidity and rising funding fees, even experienced traders may struggle to maintain their positions. Long-term liquidation risk In the current context, traders opening long positions are facing increasing pressure. The need to pay high monthly funding fees to maintain leveraged positions increases the risk of forced liquidation, especially if prices stagnate or decline. Selling pressure may rise, leading to further price declines across the entire altcoin market. AMBCrypto's analysis emphasizes the important need for caution, stating, "High altcoin leverage ratios can evaporate millions of dollars". Lessons learned for investors For investors navigating this volatile market, the following considerations are crucial: Leverage reduction: To minimize risks, investors should consider reducing leverage. High financing fees can erode profits, especially in sluggish or declining markets. Monitoring market indicators: Keeping a close eye on leverage ratios and price fluctuations is essential to predict potential correction phases. Investment portfolio diversification: Diversifying across multiple asset types can help reduce risks for highly volatile assets like altcoins. Prepare for adjustments: Historical trends show that adjustments are an unavoidable part of the cryptocurrency market cycle. Investors should prepare to overcome potential downturns. Conclusion While altcoins have shown impressive growth in recent months, the current momentum of the market signals a potential storm ahead. High leverage and high funding rates are unsustainable and may lead to increased volatility and sharp corrections. As the cryptocurrency market remains unpredictable, investors are encouraged to exercise caution and stay updated to protect their assets. DYOR! #Write2Win #Write&Earn $SHIB {spot}(SHIBUSDT)