Large-scale cryptocurrency liquidations and worries about market manipulation
Another tough day in the cryptocurrency market saw a significant drop, wiping out over $1.4 billion in leveraged positions and pulling Bitcoin down to $88K. There’s been a lot of speculation about the cause of this plunge, with theories ranging from Trump’s tariff comments to Spot ETF issuers selling off their holdings. However, the most plausible explanation seems to be the coordinated efforts of major exchanges and market makers behind these sell-offs.
The uncertainty in the market has been further emphasized by Senator Cynthia Lummis’s active promotion of an upcoming digital asset subcommittee hearing, describing it as a “big deal.” Rumors are circulating about the potential establishment of a Bitcoin Strategic Reserve and Digital Asset Stockpile by the U.S., leading some to believe that institutional players might be purposely driving prices down in order to accumulate at a discount. While there’s no concrete evidence for this yet, it’s a scenario that should be taken into consideration.
Bitcoin recently experienced a major bearish signal as it broke below the TBO Cloud for the first time since October 2024. Despite this, the long lower wick on the most recent daily candle implies strong buying interest at lower price levels. While a retest of $87K is on the horizon, Bitcoin doesn’t seem to be in a state of free fall. The daily RSI closed at 18.49, signaling significant selling pressure that may not have subsided just yet.
Following Bitcoin’s drop into heavily oversold territory, there is typically a brief period of market indecision before any relief bounce. Additionally, a new gap has formed on the CME chart at $93,570, marking a solid short-term target in line with the TBO Fast Line at around $95K. Although yesterday’s sell-off saw strong volume, similar to the crash on February 3rd, this high trading activity indicates demand in the market, suggesting that buyers are stepping in. However, the On Balance Volume (OBV) breaking support indicates that Bitcoin might not return to $100K quickly.
In contrast, Ethereum showed a stronger recovery than Bitcoin, closing with a 7% lower wick on the daily candle. While Ethereum’s volume doesn’t match Bitcoin’s, implying the need for more buyers to enter for a sustainable uptrend, a retest of $2,390 is plausible. Another CME Gap at $2,623 presents a logical target for a potential bounce. Hidden bullish divergence is emerging on Ethereum’s 4-hour RSI, a key reversal signal that supports the idea of Ethereum potentially outperforming Bitcoin in the short term.
Stablecoin dominance hit a record high of 7.21%, displaying a bearish signal for the market, as more capital remains on the sidelines rather than being actively invested in Bitcoin and other altcoins. However, similar patterns have been observed historically, indicating that stablecoin dominance might decrease after this peak. Altcoins are showing signs of accumulation and strength, with some assets experiencing positive price movements despite the overall market downturn.
In conclusion, while the market may be on the brink of a pivot, immediate reversal is not expected. It’s crucial for traders to exercise patience and focus on building strong positions through a Dollar-Cost Averaging (DCA) strategy rather than attempting to time the market bottom. The signs of a shift in market sentiment are becoming more apparent, with altcoins showing resistance to further downside, stablecoin dominance potentially peaking, and Bitcoin Dominance displaying weakness. This suggests that the worst of the sell-off may be approaching its end, signaling possible opportunities for recovery in the near future.
