The cryptocurrency market has rapidly shifted from optimism to anxiety in a single day – is a further decline likely?
A sudden announcement of 100% tariffs on Chinese imports by President Trump triggered a massive liquidation event in the crypto market, sending the Fear and Greed Index plummeting. Bitcoin crashed from above $122,000 to below $102,000, wiping out recent gains and erasing over $1 trillion in market value within three hours. This event resulted in over 1.66 million traders being liquidated, surpassing previous records like the March 2020 COVID crash. The liquidation event caused losses exceeding $19.33 billion, possibly reaching $30-$40 billion. Exchanges like Hyperliquid, Bybit, and Binance experienced substantial liquidation volumes, with Hyperliquid accounting for nearly $7 billion. Long positions absorbed most of the losses, with Bitcoin experiencing the most significant liquidations at $5.38 billion. Overall leverage within the market was significantly cleared, potentially alleviating some selling pressure. Despite the market downturn, some analysts maintain a bullish outlook, referencing ongoing 'Uptober' strength. Bitcoin’s immediate support rests around $110,000-$113,000, with the $113,500 level key for a relief rally. Ethereum needs to reclaim $4,000 for upward momentum, while continued uncertainty related to the tariffs may lead to further consolidation. The sustainability of any recovery will depend on broader market conditions and the resolution of policy concerns. RSI indicators show oversold levels, historically signaling potential reversals, though genuine bear markets can see sustained depressed readings. Bitcoin faces resistance at $117,933, $124,475, and $126,000. Traders are watching for signs of renewed strength or further declines as the market assesses the long-term impact of the tariff announcement.