What's Next After Bitcoin's Flash Crash To Below $113,000

As traders began to evaluate upcoming macroeconomic trends, the enthusiasm surrounding the Federal Reserve's interest rate reduction waned, and late Sunday night saw a sharp reversal into Monday for Bitcoin, Ethereum, and other top cryptos.

Bitcoin joined the sell-off in altcoins after it surged to about $118,000 following the Federal Open Market Committee's announcement of a 25-basis-point interest rate cut.

That ignited a risk-on attitude among market participants.

However, the cut in rates failed to ignite a prolonged upward movement as market participants assessed the implications for future developments.

The price of Bitcoin was unable to sustain its upward momentum beyond $117,750. Bitcoin fell below $113,000 and is currently experiencing a downward trend.

During a press conference, Fed Chair Jerome Powell described the rate cut as a "risk management" move, suggesting the central bank was not committing to a rapid series of cuts. This tempered expectations and failed to ignite a sustained rally.

While the rate cut in September was regarded as a crucial turning point for crypto boosts, the market continues to present numerous potential drivers that could propel prices to new highs.

However, on social platform X, The Kobeissi Letter noted that, in a rapid market shift, more than $1 billion in Bitcoin long positions were liquidated within a mere 20 minutes following a sharp decline in price.

The typical pattern observed during the Sunday night session suggests that diminished liquidity has led to a significant washout. The decline is often capitalized on at the start of the US trading session.

This sell-off was amplified by the typically low liquidity of the Sunday night trading session. The volatility had a cascading effect:

• Total liquidations surged from $630 million to $1.7 billion in a single day.
• Over 400,000 traders had their positions liquidated.
• The largest single liquidation was a position worth nearly $13 million.

By Monday, Bitcoin had fallen below $113,000, reaching a low of $112,000. Altcoins followed a similar path, with Ethereum (ETH) dropping below $4,050 before a slight recovery to $4,200.

Bitcoin's Price Action Breaking Below

After breaking past resistance at $116,800 and $117,500 last week, Bitcoin has now fallen through key support levels.

• The price broke below initial support at $114,250 and the subsequent $113,500 level.
• Next Support: Further declines could test the $112,500 support zone in the short term.
• Critical Support: The primary support level is at $110,500. A break below this could trigger a more significant decline.

Stocks Under Pressure Too?

Wall Street wrapped up the much-anticipated week surrounding the Fed cut with stocks reaching new all-time highs, fueled by the potential for additional rate cuts that enhanced the outlook for corporate earnings.

However, futures on Monday pointed to a lower open.

Given the current low volatility and the Fed's decision to lower interest rates, any concerns related to visa issues are unlikely to hinder the upward momentum of the US equities market as it continues to reach new highs.

Regarding technology firms, their earnings appear robust enough to withstand any unexpected increase in visa fees, should it come into play.

On Friday, Trump signed an executive order for a comprehensive reform of the H-1B visa program, which includes a $100,000 application fee.

The decision unsettled businesses that have historically relied on the initiative to attract international talent, especially in California’s technology-driven economy, where organizations depend on proficient software developers, data specialists, and engineers.

This action could introduce new volatility into international markets.

The situation appears particularly challenging in India, especially within its $280 billion tech sector, which is currently facing slow growth.

Still, global stocks hit new record highs as the earnings season approaches.

The rising optimism regarding corporate America’s profit expansion indicates that the upward trend may persist.

Market sentiment saw an uptick as the US President highlighted advancements in matters concerning China and announced an upcoming meeting with Xi Jinping after their recent conversation.

But none of that rubbed off on the crypto market.

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