Key Takeaways:
The cryptocurrency market is faced with strong selling pressure amid expectation of a bullish October month. On Wednesday, Bitcoin and some leading altcoins came crashing down while testing key support levels.
Ripple (XRP) suffered the biggest loss following the US Securities and Exchange Commission’s (SEC) decision to file a notice to appeal the court ruling in favor of Ripple Labs regarding the sale of XRP tokens via exchanges.
Bitcoin Losses Traction As Israel-Iran Conflict Escalates
Meanwhile, Bitcoin (BTC) has been under intense selling pressure over the past two days following rising tensions in the Middle East, caused by the escalation of the Iran-Israel conflict. After news broke out that Israel launched an imminent response to Iran’s attack, BTC price took a tumble to $60,300 earlier in the day before bouncing back above $61,000.
The majority of market analysts are expecting an even steeper price correction of more than 15% from current levels for Bitcoin. Currently, the apex cryptocurrency is trading around the median support levels of its descending trading channel, which is at $60,900. If bulls fail to keep hold of this support, then it will open the door for further decline, plunging BTC to $52,000.
Bitcoin had an impressive September that saw its price hit $66,000. Historically, September has been a bearish month for the cryptocurrency, however, last month it managed to leapfrog early losses to rise by 7%, and that too above a strong liquidation level at around $65,000 and $66,000.
Despite the pushback, optimism is high for BTC as it is posting the same price as in early August and September. During the first week of August, Bitcoin prices had plunged to as low as $49,000 before recovering steadily over the next three weeks.
It followed the same pattern in early September, dropping to a monthly low of $52,000 before resuming the uptrend set in motion the previous month. However, it remains to be seen whether the digital gold will follow the events of early August and September. According to a sentiment analysis by CoinMarketCap, over 60% of all holders expect BTC to edge higher, while only 38% are bearish about its prospects.
Prominent analyst, Crypto Capo, noted that if Bitcoin drops to $52,000, then the price of Ethereum (ETH) could plunder to $1,800.
There are also concerns regarding current Vice President and Democrat Presidential candidate Kamala Harris’ plan to adopt a 25% unrealized gains tax structure. Many believe it might trigger a major sell-off across the crypto market, severely affecting altcoins.
Possible tailwinds for bulls include the inflow of capital into the spot Bitcoin exchange-traded funds (ETFs). Data sourced by Soso Value shows that when BTC prices dropped on October 1, BlackRock purchased over $40 million worth of coins.
Outflows from spot Bitcoin ETF continued on Wednesday, with $91.75 million exiting the funds. Meanwhile, Ethereum ETFs experienced the opposite reaction, recording inflows of $14.45 million, breaking a two-day streak of outflow.
Ether Price Declines 6%, Triggering $100 Million Market-wide Sell-off
ETH’s 6% drop triggered the largest liquidation since “Black Monday” on August 5, when over $200 million worth of tokens were liquidated.
According to data from Coinglass, over $100 million in Ether positions were liquidated during the latest decline, with $98 million out of the lot representing long positions. A high liquidation event can forcefully close long positions, putting increased pressure on the price if spot bids fail to absorb the sell-off.
Ethereum remains under the $2,500 level and this is because it remains in lockstep with Bitcoin. The 90-day rolling correlation index between ETH and BTC is 0.82, which is higher than any other pair in the market.
There is also the correlation between Ether and US equities such as S&P 500 (SPX) and Dow Jones (DJI), which experienced minor corrections after the Israel-Iran conflict fired up. The correlation coefficient between ETH and SPX is 0.87, and ETH and DJI is 0.83.
Elsewhere in the market, liquid staking protocol Lido’s LDO token was down nearly 9%, following Etheruem’s decline.
How Did the Rest of the Market Perform?
Meanwhile, MOG, the second-largest cat-themed memecoin after Popcat (POPCAT), saw a slight upward price movement after getting an automated mention from Donald Trump’s X account. It seems that the former President’s account is sending a reply to any X user who liked his posts.
Other altcoins like Solana (SOL), Dogecoin (DOGE), and Toncoin (TON), witnessed corrections between the 3-4% range. Against all odds, SUI and Aptos gained more than 10% over the last 24 hours. This helped SUI cross a total value locked (TVL) of $1 billion, with the cryptocurrency now gearing up to set a new all-time high.
Read More: US SEC Files Appeal In Ripple Lawsuit
