After hinting at possible stability last week, the broader cryptocurrency market – led by Bitcoin (BTC) – is poised for a defensive stance in the days to come. Over the past 24 hours, the crypto landscape witnessed significant turmoil, recording forced liquidations exceeding $1 billion, predominantly impacting long traders. This sudden downturn has raised eyebrows among investors, prompting concerns about the market’s overall health and direction.
As Western financial markets kick off their trading on Monday, it appears that the crypto market will continue succumbing to bearish pressure. Concurrently, Asian markets have already set a pessimistic tone, amplifying fears of further market capitulation as traders assess the situation and adjust their positions accordingly.
Also Read: Crypto Crashing Today: Chinese Stock Market, Nasdaq, Hang Seng Index, Nifty 50 Plunge
Major Forces Behind Today’s Crypto Selloff
Trade War Fears
The recent dip in Bitcoin’s price, which has affected the entire altcoin market – particularly Ethereum (ETH) and XRP – can largely be attributed to escalating trade war fears. Following China’s announcement of reciprocal tariffs against the U.S., there’s speculation that more countries, particularly within the European Union and Japan, may soon follow suit. This geopolitical tension has led many crypto investors to engage in profit-taking, with some experiencing substantial losses as sentiment shifts toward caution.
Technical analysis suggests that the crypto market is poised to experience continued declines in the forthcoming days, reflecting the market’s response to the broader economic environment.
Liquidation of Overleveraged Positions
In the last 24 hours alone, the crypto market has endured a forced liquidation totaling approximately $1.01 billion, with long trades accounting for a staggering $868 million. More than 323,000 traders, including influential whale investors, were adversely affected by this wave of liquidations. This situation accentuates the risk of a long squeeze, further aggravating existing losses and heightening volatility in the market.
Bearish Technical Setup
The crypto market has been trapped in a bearish momentum since the second inauguration of U.S. President Donald Trump. Recent patterns indicate that Bitcoin has tested a macro reversal pattern, with projections suggesting it may soon target the $60,000 mark. However, the immediate outlook remains bearish.
Ethereum, on the other hand, has already dipped below a significant weekly rising logarithmic trend established in late 2023. This underscores a mounting bearish sentiment for Ether, compounded by dwindling institutional demand. The cryptocurrency’s technical indicators reflect a lack of bullish momentum, pointing toward further downturns.
Meanwhile, XRP has fallen below the crucial support level above $1.90, now trading around $1.77 at the time of this writing. This break below significant support is likely to translate into continued bearish sentiment for XRP in the near future.
Macroeconomic Concerns
The overall crypto market has been sensitive to prevalent macroeconomic concerns, particularly with the backdrop of intensified global trade wars. Reports indicate that the likelihood of a recession in the United States is rising, as economists predict accelerating inflation rates. The interplay of these macroeconomic factors has significant implications not only for traditional markets but also for the crypto space, where investor confidence is increasingly being tested.
