A strong bull market tends to attract speculators and newbie traders who hop on to the rally with an aim to get rich quickly. In their eagerness to earn huge profits, traders throw caution out of the window and take on excessive leverage. While this strategy is fruitful during the asset’s up-move, sharp corrections wipe out most accounts due to the use of massive leverage.

Bitcoin’s 

BTC

$21,146

 recent market drop below $30,000 caused the Bitcoin futures open interest to plummet from $27 billion to $11 billion. This suggests that several leveraged traders would have taken a huge hit. Although painful, these corrections reduce greed and the asset transfers from weak hands to strong hands who venture out to buy when the sentiment is negative.

While many investors are watching the price behavior of Bitcoin to gauge whether the downtrend is over, Ether 

ETH

$1,563

 has gradually been covering ground quickly. According to CoinGecko, Ether’s 24-hour trade volume at $60 billion overtook Bitcoin’s at $50 billion.

Another positive sign in favor of Ether is that the Grayscale Ethereum Trust’s price is trading at an 11% premium to Ether's spot price, indicating strong demand from institutional investors. In comparison, the Grayscale Bitcoin Trust price still trades at a discount to Bitcoin.

This suggests that traders should keep an eye on both Bitcoin and Ether to confirm that a bottom is in place. Let’s analyze the charts of the top-10 cryptocurrencies to spot any signs of a bottoming formation.