Bitcoin extended its decline on Tuesday, slipping below $107,000 reaching lowest levels since July. Bitcoin is now testing its last defensive line before returning to $100,000, near $105,000. Altcoin dropped even faster with Ethereum losing $3,800.
The cryptocurrency’s downward momentum intensified as selling pressure persisted across major coins, reflecting a broader retreat from risk and an ongoing wave of deleveraging that continues to weigh heavily.
The market’s recent behaviour reflects a broad process of forced leverage unwinding amid heightened uncertainty, particularly as trade tensions between Washington and Beijing show no signs of stabilizing.
Bulls seem increasingly reluctant to step in and absorb risk, fearing further shocks in an environment where volatility and policy unpredictability dominate. The lack of confidence has amplified the bearish sentiment, reinforcing the view that current weakness is not just about fundamentals, but also about liquidity pressure and sentiment deterioration.
Data from CoinGlass shows another wave of massive liquidations sweeping the crypto derivatives market. Nearly $230M dollars in long positions were liquidated today, following more than $536M dollars yesterday. Both Bitcoin and Ethereum each saw over 100 million dollars worth of long positions wiped out in that yesterday.
Such multi-hundred-million-dollar liquidations have now become almost routine in the crypto space, highlighting how vulnerable leveraged traders remain when volatility accelerates.
The total crypto futures open interest has now fallen for the third consecutive day, dropping from $167B on Monday to below $158B today. The contraction signals not only deleveraging but also declining market participation, as traders either close positions or get forced out amid cascading margin calls.
The shrinking open interest adds another layer of weakness, with fewer players left to absorb sharp moves or stabilize the market’s direction.
The crypto market currently faces a period of elevated volatility that could easily set the stage for another cascading liquidation event, capable of wiping out billions of dollars in minutes.
Econometric theory suggests that volatility tends to cluster in periods of high volatility that are often followed by more of the same, while calm phases are followed by another stable trading period. For now, crypto assets remain locked in a high volatility regime, where each wave of liquidation amplifies the next, keeping the market trapped in a self-reinforcing loop of instability.
This environment continues to deter bullish attempts, especially after last Friday’s staggering $17B of long liquidation that wiped out massive leveraged positions across exchanges.
In altcoins spectrum, the hit has been even harder, with many coins losing between 25% and 70% within mere moments during that black Friday collapse when nothing left but extreme losses for bulls who might be rethinking their beliefs in many cryptocurrencies narrative.
Adding to the uncertainty, the trade dispute between the United States and China is showing renewed signs of escalation. The recent sharp remarks from the U.S. Treasury Secretary directed at China’s top negotiator have injected a personal tone into the standoff, suggesting that a diplomatic thaw remains distant. This lack of clarity in global trade relations continues to unsettle markets, making risk assets particularly vulnerable to further shocks.
Investors and traders appear increasingly frustrated by the unpredictable policy environment and the recurring surprises from the Trump administration’s trade strategy.
As a result, any near-term rebound in Bitcoin may prove temporary, potentially serving as a brief corrective phase within a broader bearish structure characterized by lower highs and lower lows.
