The cryptocurrency market experienced a significant downturn early Monday, with Bitcoin (BTC), Ethereum (ETH) and other major digital assets declining sharply. This triggered a massive $1.5 billion liquidation of leveraged positions across exchanges.
Interestingly, the sell-off occurred despite a seemingly favorable Federal Reserve interest rate cut, which was anticipated to weaken the U.S. dollar and boost risk-on assets like cryptocurrencies.
Alex Kuptsikevich, FxPro's chief market analyst, noted concerning technical signals for Bitcoin. "BTCUSD broke below its upward channel from September, fell through key support levels, and declined sharply under its 50-day moving average. This combination of bearish indicators suggests further downside potential unless broader market sentiment improves fundamentally," he explained via email.
Derivatives Market Analysis
By Omkar Godbole
- Futures open interest dropped by double-digits for 18 of the top 20 cryptocurrencies (excluding BTC and HYPE) as falling prices forced out overleveraged traders.
- Short positioning appears to be increasing on Binance's USDT-margined futures, with open interest rising to 276,000 BTC from 270,000 despite near-zero funding rates.
- Notably negative funding rates for TRX, ADA, LINK, TON, UNI and 1000SHIB futures indicate strong bearish sentiment and short positioning.
- CME's BTC front-month futures maintain a $100 premium over spot prices, but traders should monitor for a potential shift to discount signaling increased selling pressure.
- On Deribit, put option premiums surged relative to calls as investors sought downside protection amid the price decline.
- Bearish sentiment has spread to XRP and SOL options markets, aligning with the negative trends in BTC and ETH.
Altcoin Market Overview
By Oliver Knight
- Multiple altcoins suffered double-digit percentage losses, with PUMP, RAY, CRV and TIA hitting their lowest prices in over a month.
- The downturn accelerated with a $1.6 billion liquidation cascade, including $500 million in ETH trading pairs according to CoinGlass data.
- Ethereum funding rates turned negative, indicating short traders are paying to maintain positions—a significant sentiment shift following ETH's rally from $2,400 to $4,831 between July and August.
- Despite bearish momentum, major cryptocurrencies like BTC, ETH and SOL are approaching key support levels where a recovery could squeeze aggressive short positions.
- The average crypto token RSI reading of 28.4/100 suggests severely oversold conditions that typically precede relief rallies, unless critical support levels break.