Key Insights
- The crypto market saw harsh liquidations over the last day, with $631 million in bullish positions closed.
- The crypto market cap declined to $3.28 billion, before recovering to $3.49 billion.
- The crash might have been caused by several macroeconomic factors, such as a report from the ISM and unexpected PMI data.
- Crucial supports will be tested more than ever, and the market must brace for impact.
The crypto market crash was especially strong today.
As illustrated, CoinGlass data shows that around $631 million worth of long positions have been liquidated so far in the last 24 hours.
This sharp decline in the market has sent shockwaves throughout the crypto community and has sparked concerns about what comes next for Bitcoin and other assets.
Let’s go over the facts.
Bitcoin Drops Below $100,000
The market’s problems began with Bitcoin’s sudden 6% crash within 24 hours, and its plunge from $102,000 to $96,290.
This has put the bulls in a chokehold, especially with the flagship cryptocurrency now hanging around the crucial $95,668 support level.
Needless to say, a break below this price level could send Bitcoin plunging below towards the $93,625 mark.
As it stands, the only release from this chokehold for the bulls would be another reclaim of the $100,000 level.
If (or when) this happens, it could signal a renewed interest in the flagship cryptocurrency and help stabilize the market.
How Is The Rest Of The Market Faring?
As expected, the rest of the crypto market isn’t doing too well either.
The total crypto market cap dropped to around $3.28 trillion, after losing a whopping $227 billion in just 24 hours.
This sharp decline shows how interconnected the entire market is, and what might happen going forward.
This figure has normalized to the $3.34 level. However, the facts remain the same:
The market will undoubtedly slide further downwards if the $3.28 trillion support level fails to hold.
This possible slide could send the entire industry down to a support floor at $3.16 trillion.
On the flip side, if the bulls continue to push upwards, we could see a recovery to $3.49 trillion.
Key Catalysts Behind the Crash
So what caused the crash in the first place?
One possible reason could be recent shifts in macroeconomics, including a sudden rise in the 10-year U.S. Treasury yield.
This unexpected rise may have spooked investors, causing the first wave of sell-offs with risk assets.
Adding to the intrigue, the Institute for Supply Management (ISM) also released some interesting data as highlighted by Reuters.
This data showed an unexpected uptick in the December Purchasing Managers’ Index (PMI) for the private service sector, which rose to 54.1 from 52.1 in November.
While this data is above the consensus forecast of 53.5, it reignited inflation fears and very likely caused U.S. equities to decline.
Interestingly, this decline didn’t stop at the crypto market.
The stock market suffered as well, with the Nasdaq-100 dropping 1.3%, and the S&P 500 slipping by 0.57%.
MicroStrategy shares also plummeted by nearly 9% according to data from Google Finance.
What’s Next for the Crypto Market?
The way forward for the crypto market depends on how well it can maintain its remaining support levels.
Bitcoin, for example, must hold above $95,668 is crucial to avoid further losses.
The broader market must also hold above the $3.28 trillion level to prevent a deeper decline.
A successful recovery from here could see Bitcoin reclaiming the $100,000 mark and the total market cap rebounding to $3.49 trillion.
If this happens, investor confidence should return, along with the strength of the bulls.
Overall, the decline of the general market shows how sensitive it is to general macroeconomic conditions.
While the immediate outlook remains to be seen, the strength of the remaining support levels will be tested more often in the coming days.
Investors must brace for volatility spikes while keeping a close eye on the market’s trends.