Bitcoin and Ethereum Downtrend Results in $295 Million Liquidation
Crypto investors faced a significant liquidation event as Bitcoin and various altcoins extended their downward trajectory. According to data from CoinGlass, total liquidations on Friday, Sep. 6, surged to over $221 million, a notable increase from $72 million the previous day. This spike marked the most substantial rise since Aug. 27, when liquidations peaked at $281 million.
Bitcoin, the leading cryptocurrency, accounted for over $114 million in liquidations, followed by Ethereum at $72 million and Solana at $14 million. The broader decline in Bitcoin and other cryptocurrencies occurred as investors offloaded risky assets in favor of safer havens. Concurrently, the tech-heavy Nasdaq 100 index plummeted by over 500 points, and the small-cap Russell 2000 index nosedived by more than 1.96%.
This market downturn followed the release of mixed jobs reports in the U.S., hinting at a potential 0.25% rate cut by the Federal Reserve instead of the anticipated 0.50%. The data indicated a slight drop in the unemployment rate to 4.2% alongside a rebound in wage growth.
There is a prevailing apprehension in the market, reflected in the fear and greed index dipping into the fear zone at 30. Historically, cryptocurrencies tend to retreat during periods of investor fear. Moreover, Bitcoin and Ethereum are experiencing subdued institutional demand, with their ETFs witnessing continuous outflows. Bitcoin ETFs have shed assets for eight consecutive days, while Ether funds have lost over $568 million since their inception.
Further data reveals a decline in futures open interest, now at its lowest point in over a month. Bitcoin’s open interest has fallen to $28.4 billion from its year-to-date peak of over $37 billion.
From a technical perspective, there are concerns that Bitcoin may be on the verge of forming a death cross pattern as the gap between the 200-day and 50-day Exponential Moving Averages narrows. The last occurrence of a death cross in 2022 resulted in a 65% price crash. Additionally, Bitcoin has slipped below the 38.2% Fibonacci Retracement level, suggesting a potential drop to the $49,000 mark, its lowest point in the previous month. A breach below this level could trigger further downside movement, impacting other altcoins negatively during Bitcoin’s underperformance.
