Bitcoin Falls Below $56K, Ethereum Drops Under $3K as Market Stress Returns

Leading cryptocurrencies sank further Sunday, erasing gains made from the relief rally in the days prior.

Major cryptocurrencies sank further Sunday, extending losses from the recent market sell-off.

The price of Bitcoin dropped below $56,000 again, despite an optimistic rally that saw the digital asset rise well beyond $58,000 the night before.

The second-largest cryptocurrency, Ethereum, also fell below the $3,000 threshold after a temporary respite.

The market has been under stress, partly due to planned Bitcoin sell-offs by defunct cryptocurrency exchange Mt.Gox this month as part of its repayment obligations to its creditors and potential sales by the German government.

The sell-offs have led to a sell-off in the last 24 hours, causing $202 million in liquidations, with $171 million in long bullish bets getting wiped out.

However, the sell-off in the last 24 hours was less severe compared to the market sell-off on March 12, which saw $336 million in short bearish bets liquidated.

A sell-off in bearish positions usually indicates traders closing their short positions at a loss and buying the cryptocurrency, which could be interpreted as a bullish signal.

On the other hand, a sell-off in bullish positions, usually long杠杆 traders getting liquidated, indicates traders closing their long positions at a loss, which could be a bearish signal.

Bitcoin's Open Interest dropped 4.67% in the last 24 hours. A fall in OI, complemented by a fall in price, indicates the capitulation of long positions, igniting hopes of a bullish recovery.

The Cryptocurrency Fear & Greed Index continues to be engulfed in "Fear." The reading of 28 at the time of writing is the lowest since Jan. 2023, the aftermath of the FTX collapse.

Top Gainers (24-Hours)

The global cryptocurrency market cap stands at $2.04 trillion, following a 4.51% drop in the last 24 hours.

Stock futures traded lower Sunday night. The Dow Jones Industrial Average Futures slipped 0.14% as of 8:30 p.m. EDT. Futures tied to the S&P 500 fell 0.14%, while Nasdaq 100 Futures were also down 0.14%.

This week, investors will seek cues from key inflation data, such as the consumer price index and producer price index, to predict the Federal Reserve’s next steps. According to CME FedWatch, investors anticipate an interest rate cut during September's FOMC meeting.

Analyst Notes: Widely followed cryptocurrency analyst Rekt Capital sounded a possibility of Bitcoin breaking to the downside from its four-month-long range if it fails to close above $56,750.

Another popular trader ruled out the possibility of an imminent altcoin rally owing to Bitcoin's negative momentum.

"BTC dominance will not top until BTC has been in high conviction price discovery for 30-45 days. Happens way every cycle. Somewhere in the low to mid 60's percent is my guess," the trader asserted.

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