Digital Asset Market Enters Healthy Consolidation as Bitcoin Tests Key Support Levels

The digital asset market is showing signs of a short-term correction, entering a consolidation phase with bearish sentiment dominating ahead of the New York market opening on October 10 (local time). According to CoinMarketCap data, the total cryptocurrency market capitalization has declined by 0.8% over the last 24 hours, standing at $4.15 trillion. Sentiment indicators remain stable, with the Fear & Greed Index holding at a neutral score of 54.

Bitcoin (BTC) Tests Crucial Price Levels in Ongoing Correction

Bitcoin (BTC), the market's cornerstone asset, experienced a 1.2% dip in the past 24 hours, trading at $121,954 at the time of reporting. Despite this setback, Bitcoin retains a weekly gain of 1.1%, although it has corrected by 3.7% from its recent high of $126,000. Analysts suggest that Bitcoin's price may revisit the $118,000–$120,000 range before it can resume its upward trajectory.

Blockchain analytics firm Glassnode highlighted that approximately 190,000 BTC were accumulated near the $117,000 level, underscoring this price range as a robust short-term support. According to cryptocurrency analyst 'Stockmoney Lizards,' “This pullback is a typical 'shakeout' often observed after new all-time highs. The correction is likely to stabilize around $118,000 to $119,000.”

In contrast, Michael van de Poppe of MN Capital offered a more immediate outlook, stating, “The sharp drop to $119,700 during yesterday’s late New York session probably marked the end of this correction phase. Bitcoin now appears well-positioned for another rally toward fresh record highs.”

Futures Market Resets Through Increased Liquidations

The Bitcoin futures market is undergoing a notable recalibration, characterized by a significant reduction in leveraged positions. Data provided by Coinglass indicates a $4.1 billion decline in open interest (OI) for Bitcoin futures amid the broader price drop. This mass liquidation of over-leveraged positions is helping to alleviate excessive speculative activity and normalize market volatility.

Blockchain firm Glassnode added, “We’re observing leverage resets on both sides of the futures market. This dynamic is essential for moderating speculative sentiment and reducing extreme fluctuations in price.”

Ethereum (ETH) and Altcoin Trends Show Mixed Movements

Ethereum (ETH), the second-largest cryptocurrency by market capitalization, fell 0.5% in the last 24 hours to $4,367, contributing to a 2.9% decline on a weekly basis. Despite the current downturn, analysts believe institutional interest in Ethereum remains strong, providing a foundation for future price stability.

Among other major altcoins, Solana (SOL) saw a 1.1% dip to $222, while Binance Coin (BNB) edged 0.3% lower to $1,269. XRP posted a 1% decline, settling at $2.8. On the other hand, HyperLiquid (HYPE) suffered a notably steep drop of 8.8%, highlighting sustained weakness in its price performance.

Market Correction Seen as Constructive for Long-Term Growth

While the ongoing decline has sparked caution, many market participants perceive the pullback as a “healthy correction” that may ultimately strengthen the overall market structure. If Bitcoin holds firmly near its key support zone at $120,000, it could resume upward momentum and aim to break back into the $124,000–$126,000 range. However, failure to maintain $118,000 as support could open the door to a deeper retracement, potentially testing the $115,000 level.

Traders remain cautiously optimistic, with most closely watching Bitcoin’s ability to defend its critical price floors while regaining upward momentum. Holding these support levels will be crucial for the next leg of the market rally.

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This comprehensive update reflects the digital asset market's current dynamics, combining short-term caution with long-term optimism as the sector navigates through a phase of correction and strategic opportunity.