The crypto market experienced a rapid downturn in the early evening U.S. hours on Monday with prices plunging across the board. Bitcoin (BTC), the bellwether of the sector, fell about 5% over the past 24 hours to just above $95,000 at press time. Ether (ETH), the second-largest cryptocurrency by market cap, was not spared either, dropping 10% to $3,590.
The broader CoinDesk 20 Index, which tracks the market performance of the top 20 cryptocurrencies by market capitalization, also suffered a significant hit, registering a decline of over 8% over the same period. Leading the descent was Cardano (ADA), Avalanche (AVAX), and XRP (XRP), each plunging roughly 20%.
CoinGlass data revealed that over $750 million worth of leveraged derivatives positions were liquidated across all digital assets within the past day. The majority of these were bullish bets, putting today’s market downturn nearly on the same level as the August 5 crash. It also trails closely behind last Thursday’s dramatic dip when BTC plummeted to $90,000 from above $100,000.
Some analysts have pointed to signs of weakening momentum in the crypto markets. These include declining exchange volumes and heavy profit-taking by long-term holders, as highlighted by analytics firm 10x Research in a Monday morning note.
Despite the current market turbulence, Markus Thielen, founder of 10x Research, suggested this could be a temporary consolidation phase before the bull market regains momentum. He advised traders to keep a close eye on which positions are outperforming and underperforming as not everything will continue to rise during this rally. His advice to traders was to steer clear of weaker segments and centre their strategies on high-conviction positions.
Meanwhile, a Monday morning report from digital asset hedge fund QCP indicated that options traders are increasingly gearing up for sideways price action until the year-end. They are taking profits on their earlier bullish bets and potentially rolling positions out to early next year. The report suggested, “Although we’re still structurally bullish, spot [price] is likely to range here for the remainder of the holiday season.”
This recent market downturn serves as a stark reminder of the volatile nature of the crypto market, emphasizing the need for traders to stay informed and adjust their strategies accordingly. Despite the current bearish mood, many analysts and traders alike remain hopeful for a strong rebound as we move into the new year.
