Crypto Market Pulls Back as Selling Pressure Triggers Liquidations → Markets

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Briefing

The cryptocurrency market saw a notable pullback on Friday, with major digital assets like Bitcoin and Ethereum experiencing declines. This downturn signals a shift in immediate market sentiment, as significant long liquidations across both Bitcoin and Ethereum amplified selling pressure, leading to price corrections. Bitcoin alone saw approximately US$13.71 million in long positions liquidated, illustrating the immediate impact of this cascading effect.

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Context

Before this recent dip, the crypto market generally showed strength throughout the week. Investor confidence was bolstered by the US Federal Reserve’s interest rate cut and positive developments like NVIDIA’s US$5 billion investment in Intel. Many were observing if this bullish momentum would continue, with some Bitcoin ETFs even drawing record inflows.

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Analysis

The market’s recent pullback stemmed from a wave of liquidation events. Think of it like a domino effect → when prices begin to fall, leveraged positions (bets that use borrowed money) that anticipated higher prices are automatically closed out to prevent further losses. These forced sales, known as liquidations, flood the market with sell orders, pushing prices down further and triggering more liquidations.

This dynamic, particularly impacting Bitcoin and Ethereum long positions, created a cycle of selling pressure that contributed to the observed price declines. This event also represents a mild consolidation after a recent surge, indicating the market is taking a breath.

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Parameters

Bitcoin 24-hour Price Change → A 1.9 percent decrease, bringing the price to US$115,191. This represents the flagship cryptocurrency’s short-term price movement.
Ethereum 24-hour Price Change → A 3.2 percent decrease, setting the price at US$4,445.54. This reflects Ethereum’s immediate market performance.
Bitcoin Long Liquidations → Approximately US$13.71 million in long positions liquidated over four hours. This figure highlights the extent of forced selling pressure on Bitcoin.
Ethereum Long Liquidations → Approximately US$10.08 million in long positions liquidated over four hours. This shows the similar selling pressure experienced by Ethereum.
RSI Level → 41.03 as of 8:00 p.m. UTC, suggesting neutral market conditions. The Relative Strength Index measures the speed and change of price movements.

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Outlook

For the coming days, market watchers should observe Bitcoin’s technical patterns, specifically the rising wedge pattern and its trading position relative to the short-term holder realized price. Upcoming token unlocks, such as LayerZero’s 25.7 million ZRO tokens on September 20 and Optimism’s 116 million OP tokens on September 21, could introduce additional supply and potentially influence market dynamics. Additionally, developments from Korea’s Blockchain Week, running from September 22 to 28, may provide new catalysts.

The crypto market is currently undergoing a healthy consolidation, with recent liquidations driving a short-term price correction after a period of strength.

Signal Acquired from → investingnews.com