The Crypto Fear & Greed Index reading went from Greed at 64 to Panic at 27 in the 24 hours after President Donald Trump announced plans to impose 100% tariffs on Chinese imports, leading to what CoinGlass described as:“The biggest liquidation waves to sweep crypto markets so far.”.
Trades from over 1.66 million traders were liquidated, with total losses exceeding $19.33 billion, but the actual numbers could exceed $30 billion by some estimates as Binance said it received only one liquidation order per second.
Tariff shock wipes out $1 trillion in 3 hours
The price of Bitcoin (BTC) fell sharply from its highs around $122,000 to below $102,000 for a short period, erasing all its gains made since August, while the price of Ethereum (ETH) fell from $4,783 to $3,400 before later recovering.
In the same context, the global market value of digital assets fell by more than 9% in 24 hours to reach $3.8 trillion, wiping out almost $1 trillion in just 3 hours, and trades worth over $7 billion were liquidated in less than an hour during last Friday’s session alone.
It is worth noting that the bulls suffered the heaviest losses, with their losses amounting to around $16.83 billion compared to $2.49 billion for their bearish counterparts.
For its part, Bitcoin dominated the liquidation wave with $5.38 billion, followed by Ethereum with transactions worth $4.43 billion, Solana-SOL with $2.01 billion and Ripple-XRP with $708 million.
While the Hyperliquid platform experienced the largest liquidation of an individual speculative trade in the price of the ETH/USD pair, worth $203.36 million, the decentralized trading platform completed the liquidation of trades worth a total of $10.3 billion, or approximately 53% of the liquidation wave value, followed by the Bybit and Binance. (Binance) and OKX, with values reaching $4.65, $2.39 and $1.21 billion, respectively.
Thus, these losses exceeded those resulting from previous liquidation waves, including the COVID pandemic-related liquidation wave in March 2020, which resulted in the liquidation of transactions worth $1.2 billion, and its counterpart related to the collapse of the FTX platform in November 2022, worth $1.6 billion, last Friday’s liquidation wave being around 20 times stronger compared to losses from the COVID pandemic, as Brian Strugats of Multicoin Capital notes that the focus is now on “counterparty exposure and the potential for broader market congestion.”
The historic power of October faces an unprecedented test
Economic analyst Timothy Peterson pointed out yesterday that waves of declines greater than 5% in the month of October are very rare, since they have only occurred 4 times in the last 10 years during the month of October for the years 2017, 2018, 2019 and 2021.
After each wave of correction, the Bitcoin price rebounded by 16% in 2017, 4% in 2018, and 21% in 2019, while 2021 saw an additional 3% decline, making October the second best month in terms of average BTC performance since 2013, with gains averaging 20.10% a month later. November offers gains The average is 46.02%, according to CoinGlass data.
If this scenario repeats itself and Bitcoin repeats its 21% rebound from October 2019 this month, a similar rebound from its record lows of $102,000 last Friday could push its price towards $124,000 within a week.
However, Trump’s announcement on tariffs, expected to be implemented in early November in response to Beijing’s restrictions on rare earth exports, heightens the current political uncertainty, while the president later indicated his willingness to remove tariffs if China changed its position before the deadline, which could allow a temporary recovery of markets despite remaining liquidation losses.
According to Bloomberg, Caroline Mauron, one of the founders of Orbit Markets, has set the next major support level for Bitcoin at $100,000 and believes that breaking through it “would suggest the end of the three-year bull market cycle.”
Bitcoin options markets also reflected this assumption with puts at $110,000, followed by $100,000, according to Deribit data.
Analysts are divided on whether the wave of liquidations is about to end or whether it will continue.
While Samson Mow, founder of Jan3, maintained his optimism, emphasizing: “There are 21 days left until the end of October.” Michael van de Poppe, founder of MN Trading Capital, described the liquidation wave as representing… “the bottom of the current cycle”, Comparing it to the wave of the COVID-19 pandemic that caused it to reach the lowest levels of the previous cycle, the Bitcoin advocate took a future view on the price, noting that “after a few years, the price of BTC could drop from $1 million to $800,000 in a matter of hours.”
For his part, David Jeong, CEO of Tread.fi, said in a Bloomberg report that the market is witnessing “A tragic event Surprisingly“It should be noted that many institutions may not have expected such severe fluctuations.
Similarly, Vincent Liu, chief investment officer at Kronos Research, believes the sharp declines are “triggered by US-China tariff concerns, but also fueled by excessive institutional betting,” adding that the correlation of macroeconomic factors with crypto markets is now being felt.
The Fear and Greed Index was 27, up from 64 yesterday, 71 a week ago and 54 last month, a clear indication of one of the fastest changes in the general mood of crypto markets, as the price of Bitcoin touched its lowest levels in 6 months in a matter of hours.
Technical analysis: Bitcoin and Ethereum prices test critical support levels
Bitcoin trading has currently stabilized around the $111,522 level after its price rebounded from its all-time low of $102,000, and its nearest support levels lie in the $110,000 to $113,000 range, with the $113,500 level identified as crucial support to boost the upward path.
The closest resistance barriers currently lie at $117,933, followed by $124,475, followed by the highest levels recorded above $126,000.
Additionally, trades worth $20 billion were liquidated, leading to the removal of excessive leverage, which could limit selling pressures, while the sustainability of any rebound depends on improving fundamentals, while trading volumes do not show a significant bias one way or the other.
As for Ethereum, it is currently trading at $3,833 after its price tested the $3,400 support level, with the closest barrier positioned at the psychological $4,000 level which needs to be breached to gain further momentum, while the support zones are stabilizing around the $3,600 to $3,800 range, with the possibility that the price fails to regain the level of $4,000, prompting a retest of that range.
Here, the highest resistance barriers lie at $4,080 followed by $4,265 and finally $4,783. Reading the Relative Strength Index (RSI), which is historically associated with a price reversal, reflects that the currency is going through an oversold wave, despite the possibility of these levels remaining depressed for extended periods during bear market cycles. Both Bitcoin and Ethereum are facing a state of uncertainty following the liquidation wave.
Overall it takes a price Bitcoin To regain its position above the $113,500 level to confirm the possibility of moving towards the $117,000-$120,000 range, but it could retest the $102,000 level or even the $95,000-$100,000 range if it fails to cross it.
The price is charged Ethereum currency (Ethereum) Consolidating above the $4,000 level to gain further momentum, pushing it towards $4,200-4,500, while its sharp decline could bring the risk of retesting the $3,600-3,800 range.
Finally, the elimination of excessive leverage has removed selling pressures in cash markets, but the uncertainty of the pricing situation and the possibility of further volatility suggest that relative stability between current levels and the lowest levels recorded recently remains the most likely possibility for the near future before future direction becomes clear.
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