In the early morning hours of September 26th (Beijing time), the crypto market experienced a sudden drop. After hovering around $113,000 for several days, Bitcoin suddenly fell below the key psychological level of $110,000, dropping to a low of $108,909, a 3.3% intraday drop.
Risk appetite reverses: the macro environment is quietly changing
The most notable feature of this decline is that it occurred in a relatively calm market environment. Unlike the flash crash in August, which was triggered by whale selling, this time there were no unusual single transactions exceeding 10,000 bitcoins. Instead, the market exhibited a gradual, "boiling frog"-like downward trend.
The primary reason for this shift is a shift in market risk appetite. Although the Federal Reserve cut interest rates as expected at its September meeting, the market is divided over the path forward. Some analysts point out that expectations for rate cuts are overpriced, while the US government's fiscal situation is a concern. If Congress fails to pass a funding bill by October 1st, the government faces the risk of a shutdown, and this uncertainty is driving investors towards a more conservative approach.
More notably, traditional financial markets have already signaled this. Futures for the three major US stock indices all fell during the Asian trading session, with Nasdaq futures dropping 0.19%. This coordinated decline in risky assets reflects a global reassessment of asset allocation strategies.
A "self-fulfilling" decline in leveraged markets
From a technical perspective, this decline exhibits typical characteristics of a leveraged market. When Bitcoin's price fell below the critical support range of $110,000-111,000, it triggered numerous stop-loss orders for leveraged traders. According to Coinglass data, liquidations across the entire network reached $1.1 billion over the past 24 hours, with long positions accounting for over 80% of these liquidations.
This "leverage wash" phenomenon is not uncommon in the cryptocurrency market. During the relatively thin liquidity of the early Asian trading session, even small amounts of selling pressure can trigger disproportionate price fluctuations. When prices fall below key technical levels, stop-loss orders in programmatic trading are triggered en masse, creating a so-called "waterfall" decline.
There are subtle changes in the flow of institutional funds
While there hasn't been a sell-off on the scale of August's whale sell-off, on-chain data still shows some concerning signs. According to CryptoQuant data, addresses holding over 1,000 Bitcoin have collectively reduced their holdings by approximately 147,000 Bitcoins over the past month. This continued reduction in holdings may be related to profit-taking by institutional investors.
Fund flows into spot Bitcoin ETFs have also shown diverging trends. While ETFs from major institutions like BlackRock and Fidelity continue to see net inflows, the overall rate of inflow has slowed significantly. Some analysts believe this indicates that institutional investors are becoming more cautious about Bitcoin's short-term performance.
This decline also reflects a deeper shift in the structure of the cryptocurrency market. Compared to the 2021 cycle, institutional participation in the current market has significantly increased, leading to a stronger correlation between price movements and traditional financial markets. When the US stock market experiences a correction, the cryptocurrency market is unlikely to remain immune.
Key position analysis
From a technical analysis perspective, $108,000 is a key support level. If Bitcoin can find support at this level, it could potentially retest the $111,000-113,000 range. Multiple technical indicators suggest Bitcoin is currently in a short-term oversold state, suggesting a potential technical rebound.
However, if the support of $108,000 is broken, the next important support level will be in the range of $105,000-106,000. This range is not only the upper edge of the previous consolidation platform, but also the area where multiple moving averages gather, which is expected to provide strong support.
Fundamental factors also warrant attention. The October 1st deadline for US government funding is a crucial timeframe. A government shutdown could further exacerbate risk aversion. Furthermore, the third-quarter earnings season is about to begin, and corporate earnings performance could impact the overall performance of risky assets.
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