Bitcoin and Ethereum Plunge as Market Fear Reaches Extreme Levels

Bitcoin and Ethereum extended their downward spiral over the past 24 hours, with each cryptocurrency shedding more than 7% as bearish sentiment swept through the crypto market like a digital tsunami.

The Fear and Greed Index plummeted to 11.00—the lowest reading this year—signaling extreme fear among investors. This metric, which measures market sentiment on a scale from 0 (extreme fear) to 100 (extreme greed), has now entered territory typically associated with capitulation phases.

“Bitcoin has returned to an area that was a strong resistance from March to October 2024,” explained Alex Kupsikevich, chief market analyst at The FxPro. “This explains the current interest of bargain hunters looking for discounted digital assets.”

Kupsikevich drew parallels to previous market cycles, noting that “a similarly intense sell-off in May 2022 ended with price consolidation around one level for a month, followed by a deeper dive.” This historical comparison has many traders bracing for potentially further downside.

Bitget’s chief market analyst pointed to derivatives selling and leveraged positioning as key amplifiers of the decline. “Macro and sentiment headwinds, including risk-off reactions to geopolitical and interest-rate uncertainty, have reduced appetite for higher-beta assets like XRP,” he added, highlighting how broader market forces are impacting crypto valuations.

In traditional markets, oil price volatility remained elevated, pricing in potential escalation in U.S.-Iran tensions. A spike in oil could add to inflationary pressures worldwide, further complicating matters for the crypto bulls who had been hoping for a more accommodative macroeconomic environment.

Derivatives Positioning

The crypto futures market continued to see capital outflows as cumulative notional open interest fell to $103 billion. Leveraged positions faced forced closures due to margin shortages, creating a cascade effect that pushed prices lower.

Over $800 million in leveraged bets was liquidated by centralized exchanges in the past 24 hours, and the tally may rise significantly given BTC just dropped below the pivotal support of $70,000. This technical breakdown has triggered stop-loss orders and automated selling, creating a negative feedback loop.

Despite liquidations, 90-day bitcoin futures are still trading at a premium to the spot price. Bear markets typically bottom when this premium evaporates, suggesting we may not have reached the ultimate capitulation point yet.

Open interest (OI) in a select few tokens such as XAUt, Chainlink (LINK), Tron (TRX), and PEPE has increased. This divergence suggests that while the broader market is selling off, certain assets are attracting attention from traders looking for opportunities in the chaos.

Annualized perpetual funding rates for several altcoins flipped negative, a sign of higher demand for bearish plays, which is typical of a downtrend. This means traders are paying a premium to maintain short positions, indicating widespread pessimism about near-term price action.

On Deribit, options reflect peak fear, with short-term bitcoin and ether puts trading at a premium of over 10 points to calls. This skew indicates that traders are willing to pay significantly more for downside protection than upside exposure.

Bearish plays like put spreads continue to dominate the bitcoin block flows. Block trades are large bets negotiated privately over the counter, and their predominance suggests institutional players are positioning for further declines.

Token Talk

The altcoin market broadly followed bitcoin during Asia and European hours, with extended losses in privacy coins Monero and Zcash, both down by as much as 7%. These privacy-focused cryptocurrencies often see amplified moves during periods of market stress as they’re considered higher-risk assets.

XRP lost more than 10% overnight after being weighed down by $30 million worth of liquidations. The precipitous fall ramped up a level at 09:00 UTC as prices tumbled from $1.44 to $1.35 in a matter of minutes, triggering panic among holders.

The one outlier of the altcoin market was derivatives exchange token MYX, which posted a 4% gain in the past 24 hours to build on a year-to-date rally of 56%. This performance stands in stark contrast to the broader market carnage and suggests that exchange tokens may be finding support as trading volumes increase during volatile periods.

The bitcoin-heavy CoinDesk 20 (CD20) Index lost 8.34% in the past 24 hours, underperforming the altcoin-dominant CoinDesk 80 (CD80), which dropped 5.92%. This divergence indicates that while bitcoin is leading the decline, some altcoins are holding up relatively better, possibly due to their lower correlation with traditional markets.

Several altcoins are now exhibiting signs of a deep downtrend characterized by a series of lower lows and lower highs not seen since the bear market of 2022. This technical pattern suggests that the current correction may have further to run before finding a sustainable bottom.

Tags: #BitcoinCrash #CryptoBloodbath #EthereumDown #MarketFear #BearMarket #CryptoWinter #BTCUnder70K #ExtremeFear #LiquidationCascade #CryptoMeltdown #DigitalAssets #Blockchain #CryptoNews #Trading #Investment #MarketAnalysis

Viral Sentences:

Bitcoin breaks below $70,000 as crypto market enters extreme fear territory
Ethereum drops 7% as derivatives liquidations top $800 million
Crypto Fear and Greed Index hits 11.00, lowest level of 2024
Bitcoin bargain hunters emerge as prices test March-October resistance levels
Oil price volatility adds to crypto market pressure
Privacy coins Monero and Zcash lead altcoin declines with 7% drops
XRP liquidation event triggers 10% overnight crash
Exchange token MYX defies market trend with 4% gain
CoinDesk 20 Index down 8.34% vs. CoinDesk 80’s 5.92% decline
Crypto futures open interest falls to $103 billion amid deleveraging
Deribit options show peak fear with puts trading 10 points above calls
Block trades dominated by bearish put spreads
Altcoins show lower lows and lower highs pattern not seen since 2022
Crypto market mirroring May 2022 sell-off pattern
Leveraged positions face margin calls as BTC tests key support

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