Summary:
Market stress from US regional banks impacted financial stocks as auto sector bankruptcies highlighted risky loans, causing stock prices to fall.
Bitcoin dropped below the 200-day SMA to $104,500, amidst $1.2 billion in crypto liquidations.
Analysts identified $88,000 as the next major support level for BTC if $104,000 does not hold.
Bitcoin (BTC) fell to $104,000 in a second significant downturn as credit stress in US regional banks sparked renewed risk aversion in the crypto market.
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Bitcoin Continues Decline as Equity Markets Falter
Bitcoin’s price began to drop during New York trading hours on Thursday as investors adopted a defensive stance, resulting in declining equities, rising bonds, and gold hitting a new all-time high.
This followed concerns over potential financial instability in the US, particularly affecting regional banks due to their exposure to two bankruptcies in the auto sector.
Related: Investors are getting better at identifying bad Bitcoin treasuries: David Bailey
First Brands Group, an Ohio-based auto parts provider with $10 billion in liabilities, and Tricolor Holdings, a subprime auto lender with $1 billion in debt, filed for bankruptcy in late September.
These collapse revealed risky lending practices, especially in private credit markets, raising fears of a broader impact.
Zions’ stock plummeted 13% following its announcement of a $50 million loss for the third quarter related to two loans in California. Western Alliance experienced an 11% drop after filing a lawsuit alleging fraud against Cantor Group V, LLC.
This led to a 0.63% decline in the S&P 500, which closed at 6,629.07 on Thursday, while the Nasdaq composite index fell by 107 points (-0.47%). The Dow Jones index lost 0.65%, closing Thursday’s trading at 45,952.24.
Financial Visualizations
This turmoil extended into the crypto market, pushing Bitcoin to an intraday low of $104,500, with the overall crypto market capitalization shrinking by 5% to $3.58 trillion, as per data from Cointelegraph Markets Pro and TradingView.
Bitcoin Experiences Liquidity Crisis Below $105,000
Bitcoin’s sell-off on Friday widened the gap from its October 6 all-time high of $126,000 to 16.5%, accompanied by extensive liquidations in the derivatives market.
Related: Bitcoin OG whales causing pain for BTC’s value increase: Willy Woo
Over $935.2 million in long positions were liquidated, with Bitcoin alone accounting for $317.8 million of that total. Ether (ETH) experienced $196.3 million in long liquidations.
A total of $1.19 billion was erased from the market, including both long and short positions, as illustrated below.
“Another day filled with liquidations across the market. It’s not just longs as the market declines,” trader Daan Crypto Trades noted on Friday, adding:
“This is typical after significant sell-offs; traders struggle to recover losses.”
CoinGlass data showed Bitcoin was consuming liquidity around $105,000, with more orders positioned at $103,500.
This suggests Bitcoin’s price could further drop to capture liquidity in this area before a potential recovery.
What’s the Bottom for Bitcoin?
Bitcoin’s fall below $105,000 on Friday resulted in the loss of crucial support levels, including the 200-day SMA at $107,520.
This prompted speculation on just how low BTC will dip before stabilizing.
“Currently, there’s no reversal indication for $BTC,” stated analyst Block_Diversity on X.
A corresponding chart pointed out important levels to monitor on the daily chart, such as last Friday’s Binance low around $101,000, along with demand zones near $95,000 and $88,000.
“These are potential targets unless $BTC finds support at $107.4K.”
“$104K is the critical level that matters now,” stated fellow analyst Sykodelic, who believes this level will hold since the daily RSI is at its lowest since the $74,000 low.
“This week’s closing figures will be quite significant.”
As reported by Cointelegraph, with the crypto Fear & Greed Index at yearly lows and showing “extreme fear,” it indicates that BTC may experience a short-term rebound from current price levels.
This article does not provide investment advice or recommendations. All investments and trading actions involve risk, and readers should perform their own research before making any decisions.
