Crypto Market Dips 2.9% as Leverage Unwinds and Altcoins Experience Profit-Taking

The global crypto market has recently experienced a downturn, with the market cap dropping 2.91% over the past 24 hours, extending its 7-day decline to 2.38%. This decline comes on the heels of a rally that peaked but ultimately stalled at a critical resistance level, catalyzed by heavy liquidations, technical rejections, and a surge in altcoin selling.

Leveraged Longs Trigger Liquidations

The most significant pressure has arisen from the derivatives markets. Data from CoinGlass indicates that total liquidations ballooned to $111.7 million within 24 hours, with long positions accounting for an overwhelming 94.5% of this total. The open interest in the market saw a notable increase of 14.8%, reaching $906 billion, further amplifying market volatility as margin calls echoed across Bitcoin and Ethereum.

• BTC fell 2.3%, currently trading at $115.7K.
• ETH slipped 5%, leading the broader market decline.

The behavior of funding rates, currently averaging +0.0064%, will be crucial in determining whether another leverage squeeze can be avoided.

Technical Resistance Caps Market

In technical analysis, the total crypto market cap failed to breach the 23.6% Fibonacci retracement level at approximately $4.04 trillion. Following a rally that pushed prices to $4.17 trillion last week, a significant rejection occurred, leading to a decline below the 7-day Simple Moving Average (SMA) of $3.96 trillion. The Relative Strength Index (RSI) currently stands at 55.9, indicating neutral momentum, while the MACD remains bearish with a divergence of -$7.38 billion.

Key support is identified near $3.74 trillion, at the 78.6% Fibonacci level, where buyers may attempt to stabilize the market.

Altcoin Profit-Taking Accelerates

As the major cryptocurrencies retrace, altcoins are experiencing more pronounced losses as traders begin to take profits. Noteworthy declines include:

• PROVE: –8% following airdrops of 15 million tokens hitting exchanges.
• HYPE: –7% after failing to sustain support at the $45 level.
• ZORA: –6.5% as its long/short ratio dropped to 0.87.

This shift in focus towards Bitcoin, which saw its dominance rise to 59.1% (a gain of 0.27%), suggests that capital is flowing out of smaller altcoins.

Outlook

The recent market decline can be viewed as a healthy correction following an overheated rally rather than a fundamental shift in market dynamics. Traders are closely monitoring Bitcoin’s ability to hold the $115K support level as it will influence the near-term direction of the market.
With a 30-day correlation between crypto assets and the Nasdaq at 0.78, Friday’s options expiry could introduce an additional wave of volatility, affecting both digital currencies and tech stocks.

Kosta has been actively involved in the crypto industry for over four years, consistently striving to present varied perspectives on different topics. He appreciates the sector’s transparency and dynamism, focusing on balanced coverage of events and developments to provide readers with neutral and informative insights.