Crypto Market Faces Sharp Sell-Off Amid Profit-Taking
The cryptocurrency market witnessed a significant sell-off on Monday, resulting in approximately $90 million worth of positions being liquidated within a mere hour. Bitcoin experienced a decline of over 1 percent, while Ethereum dropped nearly 2 percent as investors sought to capitalize on recent profits. Major altcoins, including Solana (SOL), BNB, XRP, and Cardano (ADA), also faced losses ranging from 2 to 3 percent following a notable price rally in the preceding 24 hours. Additionally, meme coins like Dogecoin (DOGE) and Shiba Inu (SHIB) plummeted by around 6 percent within the same timeframe. Despite the crypto market appearing to be on a bullish trajectory due to Donald Trump’s recent victory in the US presidential election, which is seen as favorable for Bitcoin, several indicators suggest a possible downturn.
Market Liquidation Raises Concerns
According to data from Coinglass, the crypto market experienced a staggering $90 million in liquidations over the course of just 4 hours and an alarming $650 million across the last 24 hours. Notably, a substantial portion of this was attributed to the liquidation of $75 million in long positions and $15 million in short positions within a short period, prompting a widespread sell-off. This liquidation event affected over 217,000 traders, with the largest single liquidation order recorded on a BTC-USDT swap on the OKX exchange, amounting to $15.56 million.
In the midst of this volatility, analysts at Bernstein have set an ambitious Bitcoin price target of $90,000 for the end of the year. Bitcoin’s price reached a new all-time high of $81,858 today, underscoring a bullish sentiment surrounding the leading cryptocurrency. However, data from the derivatives market raises alarms regarding a potential sell-off that could lead to a significant market crash. Notably, Bitcoin’s implied volatility (IV) has been sharply declining across all maturities, particularly evident in the BTC ATM-7 IV. This at-the-money implied volatility reflects the market’s expectations for movement in Bitcoin’s price, indicating that options traders currently anticipate little to no further upward movement in Bitcoin’s value. Consequently, this perception has contributed to the downward trend in major cryptocurrencies such as Ethereum, Solana, XRP, and Dogecoin, exacerbating the broader market sell-off.
Mt. Gox Transfer Raises Investor Concerns
Adding to the market’s anxieties, recent data from Arkham revealed that Mt. Gox transferred 30,371 BTC, valued at approximately $2.44 billion, to two wallets on Monday. Such transfers typically signal that an exchange may be preparing to liquidate its holdings, raising red flags among investors. Furthermore, China’s latest stimulus measures, including a 10 trillion yuan debt package, have fallen short of investor expectations, contributing to a shift in overall market sentiment.
As the market braces for volatility, the impending announcements regarding the US CPI and PPI inflation data, jobless claims, and a speech by Fed Chair Jerome Powell this week are all anticipated to have significant ramifications for the crypto market. Economists are forecasting elevated inflation data, which could further influence market dynamics, especially in light of potential political shifts in the US. However, some analysts maintain a positive outlook for Bitcoin’s long-term price trajectory. Veteran trader Peter Brandt has predicted that a complex continuation of the inverse head-and-shoulders pattern could push Bitcoin’s price target to nearly $125,000 by year-end and potentially reach $300,000 in the long run. While skepticism surrounds this pattern, it has garnered acceptance from notable analysts such as Richard W. Schabacker, Robert Edwards, and John Magee.
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