Cryptocurrency market collapse: Bitcoin, Ethereum, stocks drop

The cryptocurrency market took a sharp downturn on Friday as traders cut back on long holdings following recent price spikes. Leading the slide, Bitcoin dipped 4% after failing to sustain its overnight peak of $73,700, marking a new record.

Analysts indicate that if Bitcoin closes below the $69,700 level during Asia’s trading session, it could further decline and test major support around $66,000.

The recent selloff resulted in significant liquidations, with 90,456 traders losing a total of $276.84 million in just 24 hours.

The single largest liquidation order was recorded at Binance, amounting to $11.3 million in BTC/USDT, underscoring the volatile nature of the market.

Understanding Crypto Liquidations

“Crypto liquidation” occurs when a trader’s margin account fails to support open positions due to substantial losses or insufficient collateral. In such cases, exchanges or brokerages forcibly close positions at market prices to cover debts.

Despite recent losses, Bitcoin had shown resilience in October, rising about 14% by the end of Q3 2024. BlackRock clients seized the recent dip, doubling down on the spot Bitcoin ETF, IBIT, which now holds over 403,000 Bitcoin. However, the daily Relative Strength Index (RSI) peaked at 70 on Tuesday before falling to 57, suggesting that buying momentum is fading.

On-chain data reveals a steady, albeit modest, rise in retail Bitcoin holdings, with only 1,000 BTC added over the last month. Retail investors currently hold 1.753 million Bitcoin, a slight decline from the record 1.765 million held at the close of 2023.

Ethereum Faces Key Support Level

Ethereum followed a similar path, dropping more than 5% and nearing its critical support zone of around $2,500. This level aligns closely with the 50% price retracement level at $2,485, as well as the ascending trendline since early September. Analysts see this confluence as an important floor, with support at $2,420 marking the next level down if Ethereum breaks through.

Crypto-Related Stocks Feel the Impact

Crypto-linked stocks mirrored the decline, with major players reporting losses. Shares in Coinbase (COIN) and Robinhood (HOOD) fell 7% and 15%, respectively, after missing earnings expectations. Bitcoin miners Cleanspark (CLSK), Riot Platforms (RIOT), and MARA Digital (MARA) saw declines ranging from 5% to 10%, reflecting broader pressures across the crypto sector.

As the cryptocurrency market faces renewed volatility, traders and investors alike are keeping a close eye on support levels and price indicators to gauge the near-term direction of major assets like Bitcoin and Ethereum.