Cryptocurrency markets slid deeper into panic on Tuesday as a broad-based sell-off intensified, dragging prices sharply lower and triggering heavy liquidations across major digital assets

Bitcoin, the world’s largest cryptocurrency, fell about four percent to break below the $86,000 level, extending a steep retreat from its record high above $126,000 set in early October.

Ether dropped more than four percent to trade below $3,000, while losses spread rapidly across nearly every major crypto segment, including Layer 1 and Layer 2 tokens, decentralised finance (DeFi), payment-focused projects, and centralised finance (CeFi) platforms.

The downturn sparked widespread forced sell-offs, with data showing liquidations totalling roughly $583 million over the past 24 hours. The wipeout was overwhelmingly skewed toward long positions, underscoring how aggressively bullish bets were unwound as prices broke through key technical support levels. Tokens linked to decentralised physical infrastructure networks (DePIN) led the sell-off, sliding nearly six percent on average.

Market psychology deteriorated sharply alongside prices. The Crypto Fear & Greed Index fell to 11, a level typically associated with extreme fear and panic-driven trading behaviour, reflecting growing expectations of further downside in the near term.

Technical indicators are reinforcing the bearish outlook. Data from TradingView showed that 75 of the top 100 cryptocurrencies by market value are now trading below both their 50-day and 200-day simple moving averages (SMAs), a widely watched signal of sustained downtrends.

Major assets such as bitcoin, ether, solana, BNB and XRP, which together account for about 78 percent of the roughly $3 trillion crypto market, are all underperforming these key trend lines, dragging broader market sentiment lower.

When assets fall below both the 50-day and 200-day averages, traders often view it as confirmation that bearish momentum is strengthening, increasing the risk of accelerated declines as stop-loss orders are triggered and risk exposure is cut.

In contrast to the crypto market’s weakening breadth, equity markets have shown more resilience. Only 29 stocks in the Nasdaq 100 traded below both their 50-day and 200-day averages on Tuesday, highlighting a divergence between digital assets and technology equities. Bitcoin has historically shown a strong correlation with US tech stocks, often amplifying downside moves during risk-off periods.

Institutional flows are also pointing to rising caution. The US spot crypto exchange-traded funds (ETFs) recorded heavy net outflows over the past day, signalling waning investor appetite.

Bitcoin spot ETFs saw $357.6 million exit the market, led by significant withdrawals from Fidelity’s FBTC, Bitwise’s BITB and Grayscale’s GBTC.

Valkyrie’s BRRR was the only product to post a small inflow. Ethereum spot ETFs also suffered $224.94 million in net outflows, driven largely by BlackRock’s ETHA and Grayscale’s ETHE, while several other funds recorded no new inflows.

Despite the sharp sell-off, technical measures suggest the market may not yet be at a capitulation point. Only eight of the top 100 cryptocurrencies, PI, APT, ALGO, FLARE, VET, JUP, IP and KAIA, are currently classified as oversold based on the 14-day relative strength index (RSI), after filtering for those already trading below key moving averages. This indicates that while prices have fallen significantly, most assets have not yet reached levels typically associated with exhausted selling pressure.

The RSI measures price momentum on a scale of 0 to 100, with readings below 30 commonly seen as oversold and readings above 80 viewed as overbought. The limited number of oversold assets suggests that many cryptocurrencies may still have room to fall before a more durable rebound can take shape.

For traders and investors, the combination of heavy liquidations, extreme fear readings, deteriorating market breadth and persistent ETF outflows is reinforcing a defensive stance as the year-end approaches. Until major cryptocurrencies stabilise above key technical levels and risk appetite improves, market participants say the crypto market remains vulnerable to further downsides. (BusinessDay)

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