Crypto Market Faces Sharp Pullback Amid Liquidations and Macro Pressures
Cryptocurrency Sector Experiences Broad Decline as Leverage Unwinds
The cryptocurrency market has entered a corrective phase, with total capitalization dropping significantly in recent hours, underscoring persistent volatility tied to leveraged trading and global economic signals. This downturn reflects a broader trend of risk aversion in high-beta assets, where even minor triggers can amplify selling pressure across digital assets.
Key Market Metrics Highlight Extent of the Selloff
Over the past 24 hours, the total crypto market capitalization has declined by approximately 4%, stabilizing near $2.9 trillion after shedding $176.6 billion from its recent high—a 5.7% drop. This marks a continuation of a 32% retreat from the October peak, positioning the $3 trillion level as a critical psychological threshold for recovery.
- Bitcoin (BTC) led the decline, falling 4.1% and testing support around $85,200, a level that has historically absorbed selling but now faces heightened scrutiny amid whale activity.
- Ethereum (ETH) underperformed with a 6.5% loss, contributing to widespread weakness in the top 100 tokens.
- Altcoins like Hyperliquid (HYPE) saw steeper drops of 9.4%, exacerbating losses in riskier segments as investor appetite wanes.
Liquidation data reveals over $576 million in long positions wiped out across major exchanges, primarily in BTC and ETH. This cascade effect, driven by stop-loss triggers rather than fundamental news, intensified the pullback, creating a feedback loop of forced selling. Market analysts point to thinning long-side leverage as a potential stabilizer, reducing the risk of further cascading liquidations. However, the BTC/Gold relative strength index (RSI) dipping below 30—a level that has preceded long-term bottoms in prior cycles—suggests possible capital rotation toward traditional safe havens like gold, which recently approached $4,305 per ounce.
External Factors and Sector-Specific Developments Add to Uncertainty
Macroeconomic caution has compounded the leverage unwind, with global markets on edge ahead of Bank of Japan policy announcements that could signal tighter financial conditions. As a high-beta asset class, crypto has mirrored this risk-off sentiment, amplifying declines without crypto-specific catalysts.
- Spot XRP exchange-traded funds (ETFs) bucked the trend, recording 20 consecutive days of inflows totaling nearly $1 billion, in contrast to $4.6 billion in combined outflows from BTC and ETH ETFs. Despite this, XRP’s price has shown limited response, indicating potential delays in translating institutional interest to market gains.
- President Trump’s indication of reviewing clemency for the founder of privacy-focused Samourai Wallet has reignited discussions on regulatory leniency for crypto privacy tools, though no firm outcomes are confirmed. This could influence sentiment around privacy coins, but its immediate market impact remains speculative.
For BTC, reclaiming $90,700 would signal buyer re-entry and open paths toward $94,500, while a break below $85,200 risks deeper corrections to $83,500 or $80,400. Broader market support at $2.81 trillion to $2.73 trillion holds for now, but a breach could extend deleveraging. In the altcoin space, HYPE’s 9%+ drop has formed a potential bullish divergence on daily RSI charts, with selling exhaustion evident after lower lows in price. A close above $29.68 could target $36.78, but sub-$26.01 support failure would expose further downside to $20.39. These dynamics highlight the crypto market’s sensitivity to leverage and external risks, with implications for portfolio diversification in uncertain times. What could sustained ETF inflows or policy shifts mean for stabilizing digital asset valuations in the coming months?