Data & Insights: Bitcoin Downminance; Short(s) Circuit

Short Circuit

• Last Thursday, on May 8, 2025, saw the largest amount of single-day short liquidations for the year, with over $670 million in total short liquidations.
  • Of that amount, $290.8 million or 43.4%, of the total, originated on Bybit, followed by Binance with 26.5%.
  • Interestingly, elevated short liquidations persisted in the days that followed and extended through the weekend.
  • Friday recorded $301 million in short liquidations, followed by $233 million on Saturday.
• Looking at the data for BTC liquidations, we can see that 394 million worth of BTC short liquidations occurred on Thursday.
  • Interestingly, Friday and Saturday combined for just $42 million and $57 million in BTC liquidations, respectively.
  • A more granular breakdown reveals that altcoin liquidations comprised 41% of Thursday’s total, but accounted for 86% and 75% of Friday and Saturday’s totals, respectively.
  • In other words, over this 3-day stretch, especially during the weekend, most liquidations were concentrated in altcoins.
• The surge in short liquidations was driven by significant increases in the price of BTC, ETH and altcoins due to the official talks between the US and China to resolve the trade war.
  • On the day, BTC rose by roughly 6.4%, while ETH jumped by around 22%. Meanwhile, TOTAL3 also climbed by more than 7%.
  • On Friday, BTC actually dipped by 0.28%, while ETH rallied nearly 13% at its daily high, and TOTAL3 rose 4.7% at its peak.
  • Saturday saw BTC increase by 1.8%, while ETH and TOTAL3 continued their momentum, rising by 10% and 4%, respectively.
  • These price movements explain the altcoin-heavy liquidation patterns seen on Friday and Saturday.
  • Another likely factor behind the altcoin-driven liquidations over the weekend was the explosive rallies and short squeezes in specific memecoins with perpetual contracts listed on major exchanges.
  • More specifically, MOODENG and PNUT, which have perpetual contracts on Binance and Bybit, have surged by 570% and 180%, respectively, since Thursday at the time of writing.

‘Tis the season?

• As of Saturday, May 10, 2025, BTC dominance (BTC.D) had fallen to 60.2% from its high of 62.1% just three days prior.
  • BTC.D measures the market capitalization of Bitcoin, using the current Bitcoin price, relative to the total market capitalization of all crypto assets.
  • The steep decline in BTC.D from 62.1 % to 60.2 % between May 7 and  May 10 lined up perfectly with the three‑day window of notable price spikes and outsized, altcoin‑heavy liquidations mentioned earlier in the newsletter.
  • Historically, a pullback of this size in BTC.D over such a short window has often preceded brief “alt‑season” windows, as traders rotate into higher‑beta assets
• Macro sentiment may also be playing a role in the recent decline in BTC.D
  • On May 8, U.S.–China trade‑deal negotiations reportedly made “material progress” toward a partial tariff rollback.
  • This likely eased “safe‑haven” demand for Bitcoin and encouraged risk‑on positioning in altcoins.
  • As traders chased momentum in ETH, TOTAL3, and meme‑perp names, fresh capital flowed into non‑BTC assets, widening the dominance gap.
  • In effect, the dominance slide reflects a classic feedback loop, where BTC led the initial rally, short liquidations migrated into altcoins, altcoin price spikes boosted their share of total market cap, thus resulting in BTC.D falling, reinforcing the case for an “alt‑season” push as long‑tail assets briefly outperform.
• Whether this evolves into a sustained alt‑season will hinge on BTC.D.
  • A rebound would suggest last week’s dominance dip was merely a liquidation‑driven detour rather than a regime shift.

Bet on Everything

• Polymarket's new market creation reached an all-time high in April 2025, with over 7,000 new prediction markets launched. 
  • This represents a 20.7% increase from March's 5,800 markets and continues the platform's dramatic growth trajectory that began accelerating in late 2024.
• The surge in market creation comes despite a moderation in trading activity. 
  • Active traders decreased from January's peak of 462,000 to 330,000 in April, indicating that while market creation is booming, engagement per market may be diluting as options proliferate.
  • Similarly, trading volume has stabilized, with April recording just under $900 million worth of bets placed. This is down from a high of $2.6 billion in January. 
• Some of the largest markets today belong to sports markets like the NBA Championship and the Champions League outcomes. 
  • Global uncertainty has also been a driver of new market creation, with geopolitical events driving significant activity. New markets have centered around the U.S.-China trade war and the India-Pakistan conflict, generating substantial interest.
  • Fewer active addresses are trading on Polymarket even as market creation explodes, which could indicate a shift toward a more concentrated user base of market creators who are identifying and launching prediction opportunities at an accelerated pace, likely in anticipation of a possible airdrop.

Stables Moving

• Ethereum filtered on-chain volume of stablecoins reached a new all-time high in April 2025, hitting $908 billion. This milestone comes amid growing institutional adoption and several high-profile developments that have thrust stablecoins into the spotlight once more.
  • USDC has shown particularly strong growth on Ethereum, with volume trending upward over the past six months and exceeding $500 billion in transactions. 
  • Other stablecoins gaining significant volume include DAI and Sky's USDS, reflecting a diversifying stablecoin landscape.
• Traditional companies continue to embrace stablecoins at an accelerating pace. During the week of May 4th, Meta announced plans to explore stablecoin integrations to reduce transaction costs, while Stripe unveiled new stablecoin offerings to enhance its payment infrastructure.
  • President Trump's World Liberty Financial project has seen its stablecoin, USD1, mint nearly $2 billion worth of tokens. This rapid growth has positioned USD1 as the seventh-largest stablecoin by market capitalization, despite being relatively new to the market.
  • Fortune 100 companies are increasingly exploring stablecoins for cross-border payments and other product offerings, lending additional legitimacy to the sector.
• As more companies aim to issue their own stablecoins or adopt existing ones, competition for volume is likely to intensify. 
  • This competitive landscape could lead to decreased fees as issuers vie for market share, potentially benefiting end users while challenging profitability for stablecoin providers.
• The surge in stablecoin activity on Ethereum underscores the network's continued dominance as the preferred blockchain for dollar-denominated digital assets, despite challenges from alternative chains and Layer 2 solutions. 
  • While other chains have seen stablecoin usage grow, Ethereum remains the preferred venue for transacting stables.