Tuesday brought a crash alert to the financial markets, with the S&P 500’s 2% drop triggering a ripple effect across the cryptocurrency market, leading to a significant Bitcoin Crash. Bitcoin was particularly hard hit, experiencing a 4.5% decline that has raised concerns about a potential major downturn. Significant liquidations and bearish signals from key technical indicators further complicate the situation.
Here’s what it means for you!
Bitcoin’s Struggles in Sync with S&P 500 Decline
The S&P 500’s fall on Tuesday sent shockwaves through both traditional and digital asset markets. As the index dropped by 2.12%, Bitcoin followed suit, plummeting by 4.5% to reach the $56,500 level. This sharp decline led to a surge in Bitcoin liquidations, exacerbating the downward pressure on the cryptocurrency. According to data from Coinglass, approximately $246.64 million in leveraged positions are at risk of being wiped out if Bitcoin falls below $56,840—a level it has already breached.
Stochastic RSI Signals Potential 75% Crash
Crypto analyst Ali Martinez has highlighted the bearish signals emerging from Bitcoin’s Stochastic RSI on the 2-month chart. This indicator, which tracks momentum and market conditions, has shifted from a bullish to a bearish trend. Martinez noted that similar signals have often preceded significant corrections, with Bitcoin experiencing drops of around 75.50%. If history repeats itself, Bitcoin could face a severe downturn, adding to the market’s concerns.
Peter Brandt’s Bearish Outlook
Renowned trader Peter Brandt has also turned bearish on Bitcoin, citing the cryptocurrency’s recent pattern of lower highs and lower lows. This market structure indicates a lack of strong buying interest, which could lead to further declines. Brandt’s analysis suggests that without a resurgence in momentum, Bitcoin is at risk of continuing its downward spiral.
Adding to the bearish sentiment, spot Bitcoin ETF outflows have surged, with more than $287 million leaving the market on Tuesday. This indicates that institutional investors are moving away from risk-on assets like Bitcoin, further contributing to the sell-off. As these large players pull back, the market’s ability to recover in the short term may be hindered.
What’s Drawing S&P 500’s Decline
The broader market downturn was sparked by a subpoena issued by the U.S. Department of Justice (DOJ) to chipmaker Nvidia. This news sent Nvidia’s stock plummeting by 10%, dragging down other big tech companies and the S&P 500 along with it. The resulting turmoil spilled over into the crypto market, causing widespread losses across major cryptocurrencies, including Bitcoin and various altcoins.
What Lies Ahead?
All eyes are now on the U.S. Federal Reserve, which is expected to cut interest rates by 50 basis points on September 18. This decision could play a crucial role in determining whether Bitcoin can rebound or if the bears will continue to dominate. The upcoming days are critical as Bitcoin faces bearish signals, institutional outflows, and market instability.
Also Read: Bitcoin Price Plunge to $40K? Key Indicator Signals Drop, Says Famous Chart Analyst
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