BTC and ETH Prices Plunge to Multi-Month Lows Amid Liquidity Shortage

Bitcoin (BTC) and Ethereum (ETH) have experienced significant price drops, reaching multi-month lows that reflect a bearish trend in the cryptocurrency market. As of the latest analysis, BTC is priced at about $93,400, while ETH hovers just above $3,000.

Recent Market Trends

The recent decline in both cryptocurrencies occurred following a particularly volatile weekend. The ongoing downtrend is characterized by a series of lower highs and lower lows across multiple timeframes. Analysts indicate that if Bitcoin falls to $92,840, it could trigger an estimated $62 million in liquidations, potentially driving the price down to around $87,500, a crucial support level dating back to March.

Impact of Federal Reserve Policies

A notable factor in the current market dynamics is the shifting expectations regarding the Federal Reserve’s interest rate policies. Current odds suggest a 50% chance of a rate cut in December. Such reductions typically enhance the appeal of risk assets like Bitcoin and Ethereum, making dollar holdings less attractive.

Derivatives Market Insights

• Open interest in crypto futures, particularly for BTC and ETH, has seen a consistent decline over the past 24 hours.
• Fulcrum assets like Zcash (ZEC) and Litecoin (LTC) have reported drops of over 6% and 10%, respectively.
• Conversely, XRP and Cardano (ADA) show a slight increase in open interest, each up by just over 1%.

The BTC options market, particularly on Deribit, has displayed a notable bias towards puts, emphasizing a bearish outlook. Additionally, volatility has climbed above an annualized 50%. In the case of ETH, call calendar spreads were responsible for more than 50% of trading activity.

Altcoin Market Performance

The altcoin sector has remained largely subdued, following a pronounced sell-off on Friday that carried over into the weekend. Although several larger tokens showed minimal recovery on Sunday, most have declined by over 10% over the past week.

Liquidity Concerns

A marked absence of liquidity has contributed to the recent downturn. This lack of market fluidity is evidenced by Solana (SOL), which reached a five-month low of $135, and Ethereum (ETH), which dropped to a level that completely erased gains made since July. Even privacy-focused coins, which enjoyed a rally in previous months, have lost momentum.

Market Sentiment

• The Fear and Greed Index currently registers “extreme fear” at 17/100, the lowest level observed since April.
• CoinGlass’s average relative strength index (RSI) is at 43.52/100, indicating a neutral market with no significant oversold conditions.

As the crypto landscape continues to evolve, market participants remain cautious, closely monitoring both price movements and external economic indicators that may influence future trends.