The cryptocurrency market recently faced a significant setback, with over $500 million in positions being liquidated due to a sharp decline in Bitcoin and Ethereum prices. After a strong performance in July, both top cryptocurrencies lost momentum, leading to a wave of sell-offs. Currently, Bitcoin and Ethereum are hovering around new monthly lows, raising concerns about a potential further decline in the near future.
The crypto market saw a massive flush-out in the past 24 hours, with total liquidations reaching $527.75 million. Long positions took the hardest hit, accounting for $468.75 million of the total, while shorts experienced smaller losses of $59 million, according to data from CoinGlass.
Ethereum suffered the most significant losses, with $201 million in positions liquidated, out of which $177 million were long bets. Bitcoin followed closely with $110 million in liquidations, with $106 million coming from long positions. Together, these two cryptocurrencies accounted for nearly 60% of the total liquidations in the market.
The spike in liquidations coincides with ongoing market volatility, with Bitcoin trading around $113,200 and Ethereum around $3,474. Both assets have recorded weekly losses, with Bitcoin down 4.14% and Ethereum down 6.9%, indicating strong selling pressure.
In terms of price analysis, Bitcoin has retraced back to the neckline of an inverse head-and-shoulders pattern, a crucial level being closely monitored by traders. Currently trading at $113,068, a bounce from this level could signal a potential move towards $123,000 if the price breaks above the 20-day EMA at $115,444. On the downside, support between the trend line and $110,000 is expected to attract buyers, but a break below this range could lead to further selling pressure, potentially pushing the price down to $105,000 or even $100,000.
Ethereum, on the other hand, has dropped below the $3,500 support level, indicating profit-taking by short-term traders. Trading at $3,478, a bounce from the current level could see ETH price testing the $3,636 resistance level. A successful break above this level could propel Ethereum towards $4,000, though strong resistance is expected at that level. However, if Ethereum fails to hold above the 200-day EMA, it could slide down to the 50% Fibonacci retracement level at $3,300 and potentially down to the 61.8% level at $3,000.
Overall, the cryptocurrency market remains volatile, with Bitcoin and Ethereum facing significant price challenges. Traders are advised to stay vigilant and closely monitor key support and resistance levels to navigate the current market conditions effectively.