Bitcoin Faces Sharp Correction as Wall Street Sell-Off Triggers Liquidations
Wall Street faced a brutal sell-off on Tuesday, with major U.S. indices like the S&P 500 falling more than 2%. Bitcoin wasn’t spared either, as it experienced a sharp 4.5% correction, dropping to the $56,500 range. This decline has triggered a wave of BTC long liquidations.
Bitcoin Liquidations Spike Amid Fears of a 75% Drop
In tandem with the S&P 500, Bitcoin has been under heavy selling pressure, with an uptick in long liquidations over the last 24 hours. According to data from Coinglass, popular crypto analyst Ali Martinez pointed out that $246.64 million in leveraged positions could be liquidated if Bitcoin falls below $56,840. As of now, BTC is already trading below that critical level.
Martinez also flagged a worrying trend in Bitcoin’s price action. He highlighted the Stochastic RSI on the 2-month chart, which indicates a shift from bullish to bearish momentum. Historically, such signals have often been followed by major corrections, with BTC experiencing losses of approximately 75.50%. If history repeats itself, Bitcoin investors could be in for a significant downturn.
Veteran trader Peter Brandt has also turned bearish, citing a lack of momentum. He noted that BTC recent pattern of lower highs and lower lows suggests diminishing buying interest, which could pull the price down further.
At the same time, outflows from spot Bitcoin ETFs surged to over $287 million on Tuesday, signaling that institutional investors are retreating from risky assets.
Major Developments Behind the S&P 500 Decline
Adding to the market turmoil, the U.S. Department of Justice issued a subpoena to chipmaker Nvidia on Tuesday, which sent ripples across Wall Street. Nvidia’s stock plunged 10%, dragging down other major tech stocks and causing the S&P 500 to slide by 2.12%.
This ripple effect hit the cryptocurrency market hard, with BTC and altcoins tumbling between 4-10% late on Tuesday. All eyes are now on the U.S. Federal Reserve, which is expected to cut interest rates by 50 basis points at its upcoming meeting on September 18.
The key question remains: will BTC stage a rebound, or are the bears poised to tighten their grip further?
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