The cryptocurrency market has experienced a dramatic upheaval, with the Fear and Greed Index experiencing a steep decline from 64, indicating greed, to just 27, signaling fear. This shift was triggered by an announcement from President Donald Trump regarding 100% tariffs on Chinese imports. Following this declaration, CoinGlass reported what it described as “the largest liquidation event in crypto history,” resulting in over 1.66 million traders facing liquidations, with total losses exceeding $19.33 billion. However, some estimates suggest that losses could be as high as $30 billion, as Binance reportedly only accounts for one liquidation per second.
Bitcoin, which was trading above $122,000, plunged to below $102,000, erasing all gains achieved since August. Ethereum similarly fell from $4,783 to around $3,400 before a modest recovery. Overall, the global cryptocurrency market cap dipped more than 9% in 24 hours, dropping to $3.8 trillion, with approximately $1 trillion wiped out in a mere three hours. The liquidation event was particularly devastating for long positions, which suffered $16.83 billion in losses compared to $2.49 billion from shorts. Bitcoin’s liquidations alone accounted for $5.38 billion, while Ethereum saw $4.43 billion liquidated, alongside other cryptocurrencies like Solana and XRP facing significant losses.
Notably, Hyperliquid witnessed the largest single liquidation event, liquidating an ETH-USDT position worth $203.36 million. The exchange managed a staggering $10.3 billion, or roughly 53% of total liquidations, with Bybit recording $4.65 billion, Binance at $2.39 billion, and OKX at $1.21 billion. The widespread nature of the liquidations dwarfed previous significant events such as the COVID-19 market crash in March 2020, which saw $1.2 billion in liquidations, and the FTX collapse in November 2022, which resulted in $1.6 billion in losses.
Experts are now questioning whether this substantial liquidation indicates a market bottom or if there’s further pain ahead. Some, like economist Timothy Peterson, noted that October traditionally has a low incidence of drops exceeding 5%, having only happened four times in the past decade. Historically, whenever these drops occurred, Bitcoin managed to rebound significantly shortly thereafter. Analysts suggest if Bitcoin mirrors its past performance, it could recover to around $124,000 within a week.
However, uncertainty reigns as President Trump has hinted that he might reverse the tariffs if China adjusts its trade policies before the upcoming deadline on November 1. This situation leaves the market in a precarious state, as liquidated losses remain unrecoverable and contribute to ongoing volatility.
According to Caroline Mauron, co-founder of Orbit Markets, Bitcoin’s crucial support level is now regarded as $100,000; any drop below this could signify the end of the ongoing bull cycle. The options market reflects this sentiment, indicating a significant concentration of put strikes at $110,000 and $100,000.
As market analysts continue to digest the implications of this turmoil, opinions diverge. Some maintain a bullish outlook, while others fear additional declines could be forthcoming. David Jeong and Vincent Liu expressed concerns that this extreme volatility was largely fueled by institutional over-leverage amid growing macroeconomic connections impacting the cryptocurrency landscape.
Amid this uncertainty, Bitcoin’s trading price now hovers around $111,522 after bouncing from its low of $102,000. Immediate support levels have been identified between $110,000 and $113,000, with critical resistance around $113,500, which could trigger a relief rally if reclaimed. Ethereum is trading at approximately $3,833, facing immediate resistance at $4,000, with pivotal support situated between $3,600 and $3,800.
The events of recent days underline a significant point of re-evaluation for traders and analysts alike as the cryptocurrency ecosystem grapples with unprecedented volatility and potential regulatory challenges ahead. The market is now in a phase of cautious consolidation, with future movements heavily dependent on resolving these uncertainties.
