Important points:
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Financial stocks are falling as bankruptcies in the auto sector reveal high-risk loans and stress at U.S. regional banks hits markets.
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Amid $1.2 billion in crypto liquidations, Bitcoin fell below its 200-day SMA to $104,500.
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Analysts see the next key support level for BTC at $88,000 unless $104,000 holds.
Bitcoin (BTC) fell to $104,000 in a second Black Friday event as signs of credit stress at US regional banks triggered a new wave of risk aversion across crypto markets.
Bitcoin losses widen as stock prices fall
Bitcoin prices began to fall during Thursday’s New York trading session, with stocks falling, bonds rising and gold hitting new highs as investors went on the defensive.
The move comes as concerns emerge that a financial crisis is looming in the United States and local banks are under pressure after two bankruptcies in the auto sector.
Related: Investors are getting better at spotting bad Bitcoin bonds: David Bailey
First Brands Group, an Ohio-based auto parts supplier with $10 billion in debt, and Tricolor Holdings, a subprime auto lender with $1 billion in debt, filed for bankruptcy in late September.
These failures exposed risky lending practices, particularly in private credit markets, and raised concerns about the spread of infection.
Zions shares fell 13% after the company said it expects to incur a $50 million loss in the third quarter on two loans from its California unit. Western Alliance shares fell 11% after Cantar Group V filed a lawsuit alleging fraud.
As a result, the S&P 500 Index fell 0.63% to close at 6,629.07 on Thursday, while the Nasdaq Composite Index fell 107 points (-0.47%). The Dow Jones Index fell 0.65% to end the trading day on October 16th at 45,952.24.
The panic spilled over into the crypto market, pushing Bitcoin to an intraday low of $104,500 and pushing the crypto market cap down 5% to $3.58 trillion, according to data from Cointelegraph Markets Pro and TradingView.
Bitcoin loses liquidity below $105,000
Bitcoin’s decline on Friday widened its divergence from its Oct. 6 high of $126,000 to 16.5% and triggered massive liquidations across derivatives markets.
Related: Bitcoin OG Whale Responsible for BTC’s Painful Rise: Willy Wu
Over $935.2 million in long positions were liquidated, of which Bitcoin accounted for $317.8 million. Ether (ETH) followed with $196.3 million in long-term liquidations.
Overall, short and long positions wiped out a total of $1.19 billion from the market, as shown in the chart below.
“It’s another day of heavy liquidations across the board. You can’t just be long while the market is down,” trader Daan Crypto Trades said on Friday, adding:
“This is exactly what happens after a big flush: traders chop themselves up trying to recover what they lost.”
Additional data from CoinGlass showed that Bitcoin price eroded around $105,000 of liquidity, with more orders still stuck at $103,500, as shown in the chart below.
This suggests that Bitcoin price could fall further to clear out liquidity within this range before showing a sustained recovery.
How far will the price of Bitcoin fall?
Bitcoin’s drop below $105,000 today has seen it lose key support areas, including the 200-day SMA at $107,520.
As a result, traders are speculating how far BTC prices will fall before gaining a foothold.
Analyst Block_Diversity said in an
The attached chart highlights important levels to watch on the daily chart, including Binance’s last Friday low near $101,000 and demand zones near $95,000 and $88,000.
“These are open targets unless $BTC starts receiving support at $107.4K.”
“The most important HTF level here is $104,000,” said analyst Sycoderick, adding that he expects the region to hold as the daily RSI is currently at its lowest level since the $74,000 low.
“This week’s weekly results are going to be very important.”
As reported by Cointelegraph, the crypto fear and greed index is at its lowest level in a year and is in “extreme fear”, suggesting that BTC prices could bounce back from current levels in the near term.
This article does not contain investment advice or recommendations. All investment and trading moves involve risk and readers should conduct their own research when making decisions.