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The cryptocurrency market witnessed a sharp downturn as Bitcoin (BTC) fell below the $97,000 mark, triggering widespread liquidations across the market. Over $555 million in leveraged positions were wiped out in the past 24 hours, shaking investor confidence.
Market Context
The drop comes amid strengthening U.S. economic indicators, which have bolstered the U.S. dollar and raised expectations of tighter monetary policies. Recent reports showed stronger-than-expected job growth, rising consumer spending, and subdued inflation, painting a robust picture of the U.S. economy.
This backdrop has led investors to rotate away from riskier assets like cryptocurrencies, favoring traditional safe-haven investments. The strengthening U.S. dollar index (DXY), often inversely correlated with Bitcoin’s price, surged to multi-month highs.
Liquidation Frenzy
Data from market analytics platforms revealed that the liquidations were predominantly long positions, with many traders caught off guard by the sudden drop. Binance, Bybit, and OKX reported the highest volumes of liquidations, with Bitcoin accounting for a majority of the losses.
Altcoins also faced significant losses, with Ethereum (ETH) and other major cryptocurrencies shedding 5-10% of their value. This widespread sell-off has contributed to a nearly $80 billion reduction in the total crypto market capitalization.
Bitcoin’s Technical Analysis
Bitcoin’s price is now testing key support levels around $95,000, which analysts view as a critical juncture. A break below this level could pave the way for further declines, with $90,000 being the next significant support zone.
On the other hand, some bullish traders argue that the correction offers a buying opportunity, citing Bitcoin’s long-term fundamentals and upcoming halving event as potential catalysts for a recovery.
Broader Implications
The recent price action underscores Bitcoin’s ongoing struggle to decouple from macroeconomic factors. As central banks continue to shape monetary policies, the interplay between traditional markets and cryptocurrencies will likely remain a key driver of volatility.
For now, all eyes are on the Federal Reserve’s next policy meeting, where further hints about the direction of interest rates could impact Bitcoin’s trajectory.
