Crypto Markets Experience Turmoil, Mass Liquidations Impact Traders
The crypto markets have witnessed significant volatility in the past 24 hours, resulting in mass liquidations affecting over 100,000 traders. Bitcoin (BTC) briefly dipped below $60,000 on October 3 before recovering and surpassing $61,000. The world's leading cryptocurrency remains above the $61,000 mark.
Most major cryptocurrencies, including Ethereum (ETH), Solana (SOL), Ripple (XRP), and Dogecoin (DOGE), have remained in the red. As a consequence, the crypto market capitalization has declined to $2.12 trillion. Additionally, outflows from spot Bitcoin ETFs have persisted.
Crypto Market Liquidations Surge
Bitcoin (BTC) is trading just above the $61,000 mark, having experienced a significant decline from the $65,000 levels of the weekend. The sharp price drop in BTC and the broader crypto market has triggered a wave of liquidations, with positions worth $295 million being closed over the past 24 hours. Of these, $246 million occurred in long positions, indicating traders' expectations of price increases. BTC alone saw almost $45 million in long positions liquidated, affecting over 10,000 traders.
Amidst market volatility, traders have flocked to stablecoins to preserve their capital, with major stablecoins witnessing a surge in volume. Out of the $121 billion in global trading volume, $88.3 billion was concentrated in stablecoins. This suggests traders are seeking less volatile assets like stablecoins to protect their funds.
Geopolitical Factors Influence Volatility
The escalating Middle East conflict has contributed to volatility in global markets, including crypto. Uncertainty has fueled increased trading activity and price fluctuations. It has also highlighted Bitcoin's reputation as "digital gold," potentially serving as a hedge against market turbulence during geopolitical uncertainties. Some investors have sought refuge in BTC, while others have retreated, perceiving it as too speculative and high-risk.
Binance Market Share Declines
Binance, the world's largest cryptocurrency exchange, has seen its market share dwindle to 2020 levels as increased competition has allowed rivals to acquire a significant portion of users and trading volume. According to a report by CCData, Binance's spot and derivatives trading volumes have dropped by 23% and 21%, respectively, with centralized exchange activity reporting a decline. Data indicates a 17% reduction in centralized exchange trading volumes in September, a historically challenging month for trading assets. Binance now holds a 27% market share in spot trading and a 40% share in the derivatives market.
Spot Bitcoin ETFs Continue to Witness Outflows
Spot Bitcoin ETFs experienced outflows on Thursday, totaling $54 million. Cumulative outflows over the past three days have reached $388 million, underscoring market bearishness. While ARKB faced significant outflows, BlackRock's IBIT and Bitwise's BITB registered inflows. The daily trading volume of spot Bitcoin ETFs also fell from $1.66 billion to $1.13 billion.
Spot Ethereum ETFs also experienced net outflows of $3.2 million, with Grayscale's ETHE seeing the largest. However, BlackRock's ETHA offset some losses with net inflows worth $12 million.
Bitcoin (BTC) Price Analysis
Bitcoin (BTC) has recovered slightly after dropping to a low of $59,904 on Thursday, as buyers entered the market at the $60,000 level. Markets have experienced mass liquidations, affecting investors, with market observers hoping BTC can end the bearish week on a positive note. As observed in the price chart, BTC surpassed $66,000 on Saturday, reaching a daily high of $66,271. However, strong resistance at this level caused a decline back into the red on Sunday, resulting in a marginal drop and a negative close to a bullish week. The current week began with bearish sentiment intensifying as BTC fell by 3.45%, slipping below $65,000, and the 200-day SMA settled at $63,367.
Markets panicked on Tuesday as Middle East tensions escalated, raising concerns of a regional war. With the situation worsening, markets panicked, and BTC dropped almost 4%, going below the 20-day SMA and settling at $60,873. Buyers attempted a recovery on Wednesday, with BTC rising to a day high of $62,456. However, the 20-day SMA acted as a dynamic resistance level, pushing the price back down. BTC eventually experienced a marginal decline and settled at $60,671. With strong support at $60,000 and the 50-day SMA also acting as a dynamic resistance level, BTC made a modest recovery as buyers prevented a further decline. Ultimately, BTC rose by 0.22% and settled at $60,804.
The current session sees BTC up by almost 1%, rebounding from the 50-day SMA, with the price currently at $61,414. As the price recovers from its support level, buyers will aim to push BTC above $62,500 and the 20-day SMA. If successful, the next critical resistance level is $63,500. Moving above these levels could pave the way for a surge towards $65,000 and $66,000. However, if sellers regain control and drive BTC below the 50-day SMA and $60,000, the price may decline to $57,500 or $55,000.
Ethereum (ETH) Price Analysis
Ethereum (ETH) has declined almost 10% over the past week and a significant 12% in the last 48 hours, as adverse market conditions and the failure to push above $2,700 have weighed down the price. ETH's recent bearish trend has eliminated nearly all gains made since September 17, when it rebounded from a low of $2,254. Market watchers are now contemplating whether ETH can surpass $2,700 and what is required to reverse its bearish outlook. ETH has experienced a notable downward trend since September 1, while the crypto market capitalization has risen by 1.4%. The highly anticipated spot Ethereum ETFs have also underwhelmed investors, accumulating net outflows of over $550 million. Some analysts attribute ETH's price decline to selling pressure from Ethereum co-founder Vitalik Buterin and the Ethereum Foundation, while others point to diminished demand for decentralized applications (dApps).
Additionally, Ethereum enthusiasts believed in the ultrasound money theory and expected ETH to become deflationary. However, this has not occurred, and the coin-issuance rate has become positive, with Ethereum's strategic adjustments negatively impacting ETH. As observed in the price chart, ETH has been strongly bearish since the weekend, dropping by 0.73% on Saturday and 0.67% on Sunday to settle at $2,659. Selling pressure escalated on Monday, with ETH falling just over 2% to settle at $2,603. With markets turning bearish on Tuesday, ETH witnessed significant volatility before dropping almost 6% to slip below $2,500, the 20-day SMA, and the 50-day SMA to $2,448.
Buyers attempted a recovery on Wednesday but were unsuccessful, as sellers took control and pushed the price down by 3.40%. As a result, ETH fell below $2,400 and settled at $2,365. Thursday saw another round of volatility as buyers attempted to push back above $2,400. However, they were unsuccessful again, and ETH declined by 0.64% to $2,350. The current session sees ETH up by 1.50% as buyers aim to reclaim the $2,400 level. If buyers can maintain momentum, they will seek to push back to $2,500. Conversely, if sellers regain control, ETH could drop to $2,300.
Solana (SOL) Price Analysis
Solana (SOL) dipped below $140 on Thursday, experiencing significant volatility and reaching a day low of $133. As observed in the price chart, SOL's recent bullish run peaked at a high of $161. However, the rally lost momentum as SOL fell back into the red on Monday, beginning the week with a drop of almost 4% to slip below the 200-day SMA and settle at $152. With crypto markets turning bearish amidst the escalating Middle East situation, SOL registered a substantial drop of almost 5% on Tuesday, losing the $150 level and settling at $145, just above the 20-day SMA.
SOL fell below the 20-day SMA on Wednesday after a failed attempt to push above $150. As bulls lost momentum, sellers regained control and pushed SOL down by 3.44%. Consequently, SOL slipped below the 20-day SMA, the 50-day SMA, and settled at $140. Thursday saw increased volatility as sellers attempted to drive SOL below $130, while buyers sought a move past $140. Ultimately, SOL dropped by 2.40% to settle at $136.
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