Cryptocurrency Market Experiences Major Downturn Amid Widespread Selling Pressure

The cryptocurrency market took a significant hit on the 22nd of this month in New York, as heavy selling pressure triggered broad declines across major digital assets. Bitcoin (BTC) and numerous leading altcoins experienced steep drops, erasing 3.88% of total market capitalization in just a day. This left the market valued at $3.89 trillion, approximately ₩5,300 trillion. Analysts attributed the downturn to a wave of leveraged positions being forcibly liquidated due to price corrections, resulting in a liquidity shock that shook the market.

Bitcoin Breaks Below Critical Levels, Down 2.8%

According to CoinMarketCap data, Bitcoin prices fell into the low $112,000 range during trading hours in New York, ultimately closing at $112,194—a 2.83% drop over the previous 24 hours. The sharp decrease coincided with forced liquidations worth around $1 billion (₩1.35 trillion) on major exchanges such as Binance within just one hour. This marked the largest instance of short-term liquidity collapse since the start of 2025.

Ethereum and Altcoin Market See Accelerated Losses

Ethereum (ETH), the second-largest cryptocurrency by market capitalization, also suffered sharp declines, sliding 7.50% to $4,152. On the CME futures market, September contracts for Ethereum closed at $4,143.50, down 6.84% from the prior day. Similar declines of approximately 6.8% affected October and November futures contracts. The simultaneous corrections across Ethereum's futures and spot markets reflect the impact of liquidation-driven sell-offs.

Altcoins further amplified the bearish sentiment in the market. Solana (SOL) dropped 8.63%, ending at $217.04, while Dogecoin (DOGE) recorded losses of 9.90%, making it the worst performer among major tokens. Other notable declines included XRP (-5.20%), BNB (-5.96%), and Cardano (ADA), which fell 7.96%. Despite its daily drop, Binance Coin (BNB) maintained relative strength, closing the week with a 6.79% gain.

Leverage Surge Post Fed Rate Cut Heightens Market Instability

Market experts pointed fingers at excessive leveraged trading as the root cause of the recent downturn. This surge in leverage was fueled by the Federal Reserve’s recent decision to cut interest rates by 0.25 percentage points last week. While Fed Chair Jerome Powell emphasized the "cautious, risk-management measure" nature of the rate cut, it ignited speculative activity in crypto markets. Leveraged positions grew rapidly, amplifying the impact of forced liquidations and widespread price corrections.

Bitcoin’s 30-day volatility reached record lows in August, creating a stagnant market environment ripe for short-term directional bets. Deutsche Bank analysts compared the current dynamics to gold’s adoption phase, highlighting the delicate balance between speculative trading and market stability.

Corporate Acquisitions Persist Amid Market Decline

Despite market-wide turbulence, corporate entities continued strategic acquisitions in cryptocurrency. Strive Inc., for example, acquired Semler Scientific and secured 10,900 Bitcoins, cementing its position as the 12th largest public holder of BTC globally. Additionally, the firm purchased 5,816 more Bitcoins in the same timeframe, bringing its total investment to $675 million.

From a macroeconomic standpoint, the U.S. 10-year Treasury yield climbed to 4.147%, while the Dollar Index (DXY) saw a modest decline of 0.36%, landing at 96.910. Although rising yields often signal conflicting trends with a weakening dollar, analysts argue the recent crypto market downturn is rooted more in internal factors, such as structural liquidity shocks, than external macroeconomic drivers.

$111,400 Emerges as Critical Short-Term Holder Threshold

On-chain analytics firm Glassnode revealed that $111,400 serves as a critical break-even price for short-term Bitcoin holders. This threshold is seen as a pivotal battleground, reflecting the tug-of-war between bullish and bearish forces in the market. Glassnode warned that sustained trading below this crucial level could usher in a mid- to long-term bearish market structure.

In tandem, the Alternative Crypto Fear & Greed Index stood at 47, signaling a "neutral" sentiment across market participants. Despite steep declines, this suggests some bargain-buying activity aimed at capitalizing on the corrected prices.

Outlook: Key Trends to Watch

Eyes remain fixed on the short-term holder break-even price, leveraging activity, and broader market sentiment as participants assess Bitcoin’s near-term trajectory. With market volatility subdued yet prone to dramatic swings, observers are bracing for further developments that could shape the cryptocurrency landscape in the months ahead.