The cryptocurrency market experienced a significant downturn overnight, sending leading cryptocurrencies tumbling and triggering a wave of liquidations. Bitcoin, the largest cryptocurrency by market capitalization, dropped from $57,790 to $55,676 in a matter of 15 minutes, before recovering slightly to $56,400. This sharp descent rippled through the market, with Ethereum also plunging to the early $2,300s.
The steep decline resulted in over $98 million in liquidations within the last hour, with $91 million in upside bets being wiped out. The total liquidations over the past 24 hours soared to a staggering $198 million. The slump also led to a 4.14% drop in Bitcoin’s Open Interest over the last 24 hours, indicating a decline in bullish sentiment. The Long/Short Ratio further dipped, highlighting the dominance of bearish bets. The Cryptocurrency Fear & Greed Index reflected this sentiment, placing the market in “Fear” at the time of writing.
The broader market also experienced losses, with the global cryptocurrency market contracting by 2.56% in the past 24 hours, bringing its total value to $2.02 trillion.
Meanwhile, traditional markets also suffered losses, recording their worst day since the August 5th sell-off. The Dow Jones Industrial Average Futures tumbled 626.15 points, or 1.51%, to close at 40,936.93. The S&P 500 slipped 2.12% to end at 5,528.93, while the tech-heavy Nasdaq Composite sank 3.26%, finishing at 17,136.30.
The downturn in the stock market was fueled by concerns about a potential recession, further exacerbated by fresh data revealing a contraction in U.S. manufacturing activity for the fifth consecutive month.
Cryptocurrency analysts are expressing concerns about a potential correction in the market. Popular cryptocurrency trader Justin Bennett stated that he has been targeting $53,000 for Bitcoin since its rejection at $63,000, but he did not rule out the possibility of Bitcoin falling further to $48,000. Bennett remarked, “Markets love symmetry, and fakeouts to one side of a pattern usually trigger extended moves in the opposite direction.”
Adding to the concerns, widely followed cryptocurrency analyst Ali Martinez identified a potential trend reversal from bullish to bearish by the stochastic RSI on Bitcoin’s 2-month chart. Martinez highlighted that historically, this signal has preceded a significant correction of around 75.50% in the past 10 years.
The recent downturn in the cryptocurrency market has sparked concerns among investors and analysts about the potential for a deeper correction. The combination of bearish market sentiment, weak economic data, and technical indicators pointing to a potential trend reversal has created a challenging environment for crypto investors.
