In the early hours of today, the cryptocurrency market took a sharp turn, and Bitcoin (BTC) fell to $114,992 for the first time this week.
At press time, BTC was trading at $115,117; a 24-hour loss of 2.82% and a 7-day loss of 5.21%.
This correction follows a broad profit-taking exercise after last week’s record highs, with speculation that another risk-off market sentiment alert traders in keeping their movements in check before the US Federal Reserve publishes its updates on policy.
Altcoins were also impacted. XRP slipped below $3, while Solana (SOL) and other altcoins saw corrections in price activity ranging from 2–5%.
Even with this downturn in price activity, institutional participation remained high. Reports indicate BlackRock’s Bitcoin ETF saw significantly higher inflows, revealing that long-term demand remains strong.
Derivatives Market Drives Volatility and Liquidations
During today’s correction, it has become clear that the derivatives market caused the most extreme pressure.
Per the data from CoinGlass, more than $111.7 million of leveraged positions were liquidated in the past 24 hours (with long traders accounting for 94.5% of the losses).
Open interest in futures contracts jumped 14.8% to $906 billion, which amplified volatility as margin calls triggered cascading sell-offs in both Bitcoin and Ethereum.
Ethereum (ETH) fell to below $4,300 nearest support during the move, and is now trading approximately $4,272, down 6.3% in the past 24 hours.
So the recent extreme moves in crypto highlight the remaining risk from over-leveraging the crypto market, indicating that potential capital still exists in the decentralized finance space.
Also Read: Ethereum’s Market Cap Reaches $515.8B, Surpasses Netflix’s Cap, Briefly Crosses Mastercard
Market Technicals Signal Neutral Momentum but Bearish Risks
The total crypto market cap, from a technical point of view, has again failed to hold key resistance. UnoCrypto earlier reported that it reclaimed the $4 trillion mark.
However, after rejecting the 23.6% Fibonacci retracement at $4.04 trillion, the total crypto market cap has also failed to hold the recent high of $4.17 trillion.
The total crypto market cap now sits below the 7-day simple moving average (SMA) of $3.96 trillion.
The total crypto market valuation currently sits right around $3.9 trillion, while the relative strength index (RSI) is at 55.9, signalling a neutral reading in momentum.
However, the MACD still appears bearish with a divergence of $7.38 billion.
Following last week’s bearish momentum, analysts have identified $3.74 trillion, the 78.6% Fibonacci support zone, as the next opportunity for buyers to stabilize the market.
Also Read: Memecoin $PEPE Tops $5.29B Market Cap And Price Surges 14% As Momentum Picks Up
NFT Market Suffers $1.2 Billion Drop Amid Ethereum Weakness
The non-fungible token (NFT) sector is suffering badly, as the Ethereum drop is impacting valuations. NFT Price Floor data highlights that the total market cap of all NFT collections is down to $8.1 billion; that is a total market cap reduction of 12% in less than one week’s time!
After the last rally, the overall NFT market cap reached $9.3 billion. However, the price drop now places its value down from $9.3 billion to $8.1 billion, a staggering $1.2 billion.
Similarly, most of the top 10 NFT collections had also dropped in price based on ETH’s price drop and prevalence of volatility.
Given that most NFTs are minted on the Ethereum blockchain, the market is highly dependent on ETH’s price; even a slight change can affect valuations.
Outlook: Volatility Persists but Institutional Support Offers Cushion
Although the recent price adjustment to the downside shows weakness across the entire crypto asset universe, meaningful institutional inflows still show that longer-bullishness is still intact.
At current Bitcoin prices, the market cap is around $2.29 trillion at a circulating supply of 20 million BTC. Also, the stablecoin market is strong, with a current $265 billion market capitalization.
Memecoins such as WIF and PEPE rebounded against the broader trend, which shows speculative search capital is still in the works.
The Fear & Greed Index fell to 60, indicating that a degree of euphoria has cooled but is still well into “Greed” territory.
Some market observers have noted that if Bitcoin can hold support around $115K and the total crypto market can stabilize around $3.74 trillion, we could see a resumption of recovery momentum in the near future, although volatility will remain high.
Also Read: Ethena’s USDe Supply Jumps 75% To $9.3 B, Overtakes FDUSD As 3rd Largest Stablecoin