The crypto market is reeling after a sharp reversal that erased nearly all of its recent gains, with Bitcoin falling below $109,000, and Ethereum slipping under $4,000.
The sell-off has left traders grappling with high volatility, forced liquidations, and a renewed sense of caution across digital assets.
FOMC hangover
Timothy Misir, head of research at BRN, described the current downturn as a “post-FOMC hangover,” while pointing out that Bitcoin price dropped to as low as $108,652 during the week.
According to Misir:
“The move flushed highly leveraged longs and prompted a swift repricing: volatility spiked, puts were bought aggressively, and front-end skew moved materially higher.”
Notably, this price slump dipped below BTC’s short-term holder realized price of $109,700 for the first time in five months, signaling stress among recent buyers.
Ethereum mirrored the weakness, dropping to its lowest level since early August. Solana fell under $200, and the total crypto market capitalization shed about $170 billion in 24 hours as risk aversion gripped investors.
CryptoQuant analyst JA Maarturn pointed out that this current sell-off represents a significant cleanup in risk-on positioning. He estimated that $11.8 billion in leveraged altcoin bets and $3.2 billion in speculative Bitcoin positions have been flushed out, effectively resetting risk appetite across the market
What next?
Despite this decline, analysts at Matrixport have argued that the derivatives markets are flashing mixed signals for crypto investors.
“Funding costs, leverage, and volumes across BTC, ETH, and SOL highlight both fragility and opportunity,” they noted, pointing to clustering signals around key on-chain thresholds that often precede major breakouts.
They added that Bitcoin is nearing the apex of a symmetrical triangle, a technical formation that previously preceded decisive moves.
However, with option traders already positioning near the critical $110,000 zone, any deviation from the seasonal volatility pattern, which typically ramps up in mid-October, could spark an earlier breakout or deeper correction.
They concluded:
“Emerging patterns in skew, open interest, and volatility suggest the next phase of the cycle may unfold very differently from the last.”
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