The cryptocurrency market experienced another wave of liquidations in the past 24 hours, with Bitcoin (BTC) and Ethereum (ETH) recording $297.17 million and $491.97 million in liquidations, respectively. Only 7.9% of Bitcoin liquidations and 7.8% of Ethereum liquidations were short positions, as BTC fell 3.20% and ETH plummeted 7.90% within hours.
What triggered the sell-off?
In recent weeks, the Binance heist of $6.3 billion severely affected BTC price action, according to the report. The Mercado Bitcoin security incident also impacted market sentiment, and the loss of a key onchain support level warned of a deeper correction.
A post on X by The Kobeissi Letter detailed how S&P 500 Futures erased an implied $300 billion in market cap a minute after the 6:00 PM ET open. Under ten minutes later, all losses were erased as traders bought the dip. The commentary also noted that Nvidia CEO Jensen Huang had admitted to a “relationship” with a Chinese spy, which helped stage a quickly undone correction.
What next for Bitcoin?
The fall in recent hours reached a low of $73.5k. Sentiment was already weak, and the swift liquidation cascade has likely made market participants more risk-averse.
The reaction of the S&P 500 suggested buyer strength, which could translate into strong crypto demand later, during the New York session open.
AMBCrypto reported that Bitcoin prices had fallen below the true market mean at $77.6k recently. Now, it was also trading below the 50-week Moving Average (MA).
Alex Thorn, Head of Research at Galaxy, pointed out that BTC has only slipped below its 50-week MA twice after reclaiming it as a post-bear bottom. In neither of those times, which were in 2012 and 2019-20, did BTC descend to new weekly lows.
The weekly structure was bullish following the close above $82,850. The weekly low in question is at $57.8k, which Thorn pointed out was not at risk, based on the historical 50-week MA loss following a recovery from a bear market.
At the time of writing, momentum was bearish, and a price drop below $70k was feasible. The $65k-$66k area would represent a deep discount opportunity for buyers. In the coming days, more losses appeared likely.
Final summary
The stock market sell-off and the subsequent recovery of the S&P 500 futures losses helped explain the sudden volatility in the crypto markets. Though momentum was now bearish, a price drop to new lows below $57,800 appeared unlikely, based on historical data.
