Why is the Crypto Market Down? Exploring Recent Declines
Price action across the cryptocurrency market is seeing downside in recent days, led by declines in top-ranking cryptocurrencies, Bitcoin (BTC) and Ether (ETH).
As of Nov. 15, the crypto market’s net capitalization was down over 6% to $1.32 trillion when compared to its local high of $1.41 trillion from two days ago.
Why is the crypto market down?
The recent decline in the crypto market can be attributed to several factors, as explained below.
“Overbought” correction
The crypto market’s recent decline occurred largely due to its excessively overbought conditions.
Notably, all the major cryptocurrencies witnessed their daily relative strength index (RSI) indicator crossing and staying above 70, which is a bearish sign. Simply put, an overbought RSI dampens the buying demand for assets at their local highs, leading to pullbacks.
Crypto market cap daily performance chart.
Fake XRP ETF filing
The decline in the crypto market is happening during a week when the U.S. Securities and Exchange Commission (SEC) will review some pending Spot Bitcoin ETF applications.
Notably, the securities regulator must decide on applications from Hashdex and Global X ETFs by Nov. 17. They also need to decide on Franklin Templeton’s Bitcoin ETF application by Nov. 21. Failing to do so would push the deadline to 2024.
The market anticipates another delay, according to James Edwards, a crypto analyst at Australian fintech firm Finder. The analyst mentioned a fake BlackRock XRP trust filing that caused extreme price swings in the XRP markets. He believes this event will hurt the chances of launching a Spot Bitcoin ETF in the U.S. because it supports the SEC’s claims of price manipulation in the crypto industry.
Spot Bitcoin ETF deadlines.
Long liquidations
The decline across major cryptocurrencies has led to a rush of liquidations across the derivative market. For instance, the past 24 hours have witnessed $307.67 million worth of liquidations, out of which around $265 million are long positions.
Crypto market prices are negatively affected when long derivative positions are liquidated without buying pressure from trading volume.
Crypto liquidation heatmap.
Is the crypto bull run over?
The ongoing correction in the crypto market does not put an end to its year-long bull run.
Chart technicals suggest that the market is just moving up and down within an upward trending pattern. The recent drop in prices started after it reached the highest point of this trend. Now, the market looks to find support near the 0.236 Fibonacci level of $1.24 trillion.
Crypto market’s weekly performance chart.
If the crypto market stabilizes around $1.24 trillion, then its likelihood of retesting the channel’s upper trendline near $1.5 trillion is high. Conversely, a close below $1.24 trillion will put the market at risk of falling toward the lower trendline support closer to $1 trillion.
Disclaimer: This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
