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The digital currency market fell sharply yesterday (Thursday), and a wave of sharp declines caused the Bitcoin price to lose its obvious bullish sentiment.
The currency’s price is down more than 50% from its peak reached in October, falling from $77,000 to about $60,000 in just 24 hours, one of the worst single-day trades.
Losses also extended to alternative currencies, with some digital currencies falling close to 20%, such as XRP, while according to “CoinGlass” data, the single-day liquidation value was approximately $2.6 billion, with nearly 600,000 traders liquidated.
According to the interpretation of the “Kobeissi” announcement, despite the sharp decline, the fundamentals of the crypto market have not changed fundamentally, but the real reason can be traced back to a previous shock on October 10, when more than $19 billion in positions were liquidated.
The announcement stated that the day was a structural turning point that weakened the market structure and undermined market sentiment.
The “Kobeissi” announcement also explained that between November 15 and January 15, the price range seemed stable, but there were intermittent waves of liquidation and high and low gaps, which were considered to be manifestations of market structural flaws.
The announcement also pointed out that there was a recurring negative cycle in the qualifiers, which ultimately led to a deterioration in morale, which then accelerated the progress of the qualifiers.
About $10 billion in positions have been liquidated since January 24 alone, equivalent to about 55% of what was recorded on October 10, supporting the idea of ​​a structural decline and not just a temporary correction.
The analysis added that selling pressure has spread to other cryptocurrency categories, while Bitcoin’s market depth (i.e. the liquidity capable of absorbing large orders) remains more than 30% below its October peak.
The last time the depth indicator reached these levels was after the FTX platform crash in 2022, the announcement said.
Given the speed and scale of the move, periods of sharp decline may also include large selling or liquidation of large positions by institutional entities or large players.
As for the question “When will the bottom come?”
The analysis of “Kobeissi” answers that the bottom will only become clear through a sharp decline that drives out excessive leverage (capitulation) and changes sentiment to the maximum degree of pessimism, before structural liquidity returns to the market.
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