Crypto investors faced significant liquidations, marking the largest in over a week as Bitcoin and most altcoins continued their downtrend.

Bitcoin and Altcoins Liquidations Surge

Data compiled on Sep. 6 revealed that total liquidations jumped to over $221 million, up from $72 million the previous day. This was the largest increase since Aug. 27, when liquidations reached $281 million.

Bitcoin (BTC), the largest cryptocurrency, led the liquidations with over $114 million, followed by Ethereum (ETH) with $72 million, and Solana (SOL) with $14 million.

Market Downtrend and Investor Behavior

Bitcoin and other cryptocurrencies declined as investors moved away from risky assets to safer options. The Nasdaq 100 index fell by over 500 points, and the small-cap Russell 2000 index dropped by over 1.96%.

This decline was influenced by mixed U.S. jobs reports, which suggested that the Federal Reserve might deliver a 0.25% cut instead of the anticipated 0.50%. The unemployment rate slightly decreased to 4.2%, and wage growth showed improvement.

Especially after the excitement of a month ago, when analysts and economists suddenly increased their probability of an economic recession, this morning’s US jobs report comes as a relief… that is unless you were absolutely convinced that the Federal Reserve would cut…

Market Sentiment and Institutional Demand

There is a risk that Bitcoin and other altcoins may continue to fall in the coming weeks. Market sentiment has shifted to fear, as indicated by the fear and greed index falling to 30. Historically, cryptocurrencies tend to retreat when investors are fearful.

Bitcoin and Ethereum are also experiencing weak institutional demand, with their ETFs continuing to see outflows. Data indicates that Bitcoin ETFs have shed assets for eight consecutive days, while Ether funds have lost over $568 million since inception.

Additional data shows that futures open interest has been declining, now at its lowest point in over a month. Bitcoin’s open interest dropped to $28.4 billion, down from a year-to-date high of over $37 billion.

Bitcoin Price and Technical Analysis

Technically, Bitcoin is at risk of forming a death cross pattern, as the gap between the 200-day and 50-day Exponential Moving Averages is narrowing. The last death cross event in 2022 caused a 65% crash.

Bitcoin has also moved below the 38.2% Fibonacci Retracement point, suggesting it could drop to the 50% level of $49,000, its lowest point last month. A drop below this level could lead to further declines. Other altcoins often follow Bitcoin’s trend, crashing when BTC is not performing well.

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