A crypto crash happened today, with Bitcoin and most altcoins continuing their recent downtrend. Bitcoin price plunged to a low of $104,130, down by 17% from its highest level this year.
Other top altcoins like Aster, Aptos, World Liberty Financial, Cosmos, Toncoin, Sei, and Flare plunged by over 10% in the last 24 hours. All these tokens have moved to the bear market after falling by over 40% from their highest level this year.
Crypto crash is happening as Bitcoin forms risky patterns
The first main reason why the crypto market crash is happening is that Bitcoin price has formed highly bearish chart patterns on the daily and weekly charts.
For example, the daily chart shows that the coin has formed a head-and-shoulders pattern on the daily chart, which often leads to more downside over time.
The coin has also formed a death cross pattern, which is characterized by the crossover of the 50-day and 200-day moving averages.
Bitcoin has also formed some major bearish chart patterns. For example, it has moved below the lower side of the ascending channel, a sign that bears have prevailed.
Additionally, the coin remains below the Ichimoku cloud and the Supertrend indicators. Therefore, the most likely Bitcoin price forecast is bearish, with the next key support level to watch being the psychological level at $100,000.
A move below that support level will point to more downside as it will send a signal that bears have prevailed. Such a move will, on the other hand, lead to more downside among other altcoins.
Crypto market crashing as the US dollar index jumps
The crypto market crash is also happening as the US dollar index gains steam. Data shows that the index jumped to a high of $99.80, its highest level since August 1 this year.
The dollar index has jumped after the Federal Reserve slashed interest rates by 0.25% last week. It also announced that it would start ending its quantitative tightening policies in December this year.
In theory, these are all bullish news for the crypto industry because these tokens thrive in a period of easy money policies.
However, the bank warned that it may not cut interest rates in the coming meeting in December as inflation remains high. In a statement on Monday, Fed’s Austan Goolsbee said:
“I am nervous about the inflation side of the ledger, where you’ve seen inflation above the target for four and a half years and it’s trending the wrong way.”
Liquidations and fear are contributing to the crypto market crash
Most importantly, the crypto market is crashing because of the ongoing panic among investors. Data shows that the Crypto Fear and Greed Index has slumped in the past few days and is now in the fear zone of 30.
The fear is mostly driven by the recent surge in liquidations. Data shows that the daily liquidations jumped by 160% in the last 24 hours to over $1.3 billion. Over 327,790 traders were liquidated.
This growing liquidation is bringing memories of the one that happened on October 11, when over 1.6 million traders were wiped out.
Therefore, it will take time for crypto investors to move on from that event. This explains why any rebound in the crypto market is finding substantial resistance.
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