Monday witnessed a widespread decline in digital currency values, with
Bitcoin (BTC) and Ethereum (ETH) spearheading a significant market downturn.
This sell-off pushed prominent cryptocurrencies to their lowest levels in
weeks as key technical support levels failed and investors engaged in
accelerated profit-taking.
The total market capitalization of the cryptocurrency sector decreased by $77
billion during Monday’s trading. Over 400,000 traders experienced
liquidations totaling $1.7 billion. A sense of caution has entered the
market, with traders reassessing their strategies as the month draws to a
close.
Why is the crypto market declining?
This article analyzes the recent downturn by examining technical charts for
XRP/USDT, BTC/USDT, DOGE/USDT, and ETH/USDT.
Several broad economic factors have played a part in this sell-off. Although
the Federal Reserve’s decision last week to lower rates to a range of
4.00-4.25% initially boosted risk-on assets, Chairman Powell’s cautious
comments about inflation have reduced expectations for rapid monetary easing.
“Consequently, traders are showing reluctance to further expand crypto’s
recent gains without new catalysts from the wider economy,” commented Joel
Kruger, a strategist specializing in FX and crypto at LMAX Group.
He further stated, “Market sentiment has become more reserved, potentially
driven by Bitcoin’s price outperforming ETH, signaling a move toward safer
assets.” “Profit-taking is also expected, following September’s
significant upswing, an unusual occurrence for a month that has typically
been a weak period for Bitcoin.”
The strategist highlighted upcoming economic reports as critical for market
direction: “Investors are closely monitoring the upcoming PCE inflation
data and a packed schedule of speeches from Fed officials this week. Both
could lead to adjustments in rate-cut expectations and impact
liquidity
conditions.”
Consequently, cryptocurrency values have receded to their lowest points in
over a month, extending losses for four, and in some instances, five
consecutive trading days. The cryptocurrency heatmap from CoinMarketCap
visually confirms the widespread downturn across the market:
Source: CoinMarketCap
Bitcoin
dropped below the critical psychological level of $115,000, trading at
$112,840 after hitting intraday lows near $111,760. The leading
cryptocurrency reversed course from September highs above $117,000, testing
the lower edge of its established trading range since July.
From a technical perspective, Bitcoin’s break below its 50-day moving
average at $115,000 indicates the possibility of further declines towards
the $105,000 support area, which aligns with a 38.2% Fibonacci retracement
level and the 200-day exponential moving average. In my opinion, this zone
presents a strong support level, even if Bitcoin were to break out of its
current consolidation pattern.
Why Bitcoin price is going down today? Source: Tradingview.com
The ongoing sell-off is attributed to profit-taking activities following
September’s “Uptober” surge. On-chain data reveals that major
holders have transferred substantial Bitcoin amounts to exchanges, a typical
sign of profit realization.
Bitcoin
is currently situated within its established trading range of $112,000 to
$120,000, which has been briefly exceeded on both the upside in August and
the downside in early September.
Ethereum Breaches Key Moving Averages
Ethereum
experienced even greater downward pressure, as the second-largest digital
asset by market capitalization fell to approximately $4,100 during Monday’s
trading session, marking its lowest value in over a month. This sharp
decline broke through Ethereum’s 50-day exponential moving average and
September lows. Although some of the selling pressure eased as ETH rebounded
to trade near $4,200, it still reflects a drop of over 5% for the day.
From a technical analysis perspective, Ethereum has moved significantly away
from the August highs tested on August 13, around $4,800. Despite the
weakness shown on Monday, in my opinion, Ethereum continues to trade within
the consolidation channel that has been in place since the beginning of
August, fluctuating between support at $4,060 and resistance at
$4,800—a range representing approximately 17% in price volatility.
Why Ethereum price is going down today? Source: Tradingview.com
Current price movements suggest that Ethereum is currently testing the lower
end of this established trading range. The next crucial support level lies
at the $4,060 zone, which has held firm numerous times since August.
XRP Tests Multi-Month Support Area
XRP price
was among the weakest performers on Monday within the major cryptocurrency
sector, declining for the fifth consecutive day to test levels below $2.70.
This decline marked XRP’s lowest level since the start of September and
reached levels last seen in early July, representing a two-month low.
In less than a week, XRP has dropped from a local resistance point at $3.12
and September highs to the lower boundary of its trading range, which has
been tested three times since the start of August. From a technical
analysis perspective, this support zone aligns with a 50% Fibonacci
retracement level and local highs from the 2024-2025 timeframe, typically
acting as a strong area of support.
In my opinion, slightly below this level lies the 200-day exponential
moving average, combined with the $2.58 level and a 61.8% Fibonacci
retracement, forming a broader support area that should help protect XRP
from greater losses. The confluence of these technical indicators points to
a critical moment for this digital token.
Why XRP price is going down today? Source: Tradingview.com
Dogecoin Experiences the Steepest Drop Among Major Cryptocurrencies
Of the four major cryptocurrencies examined,
Dogecoin
recorded the most significant losses. This meme-inspired token fell by more
than 10% at one point during Monday’s session, reaching just 23 cents,
although it found a support level at the 50-day exponential moving average.
Currently, it is trading down 8.6% near 24 cents, with a precise valuation
of $0.2384.
Dogecoin had seen a strong surge in September, briefly reaching 31 cents—the
highest level it had achieved since the start of the year. However, it has
corrected sharply and, according to my technical analysis, is now returning
to the trading range seen for most of August, which lies between 21 cents
and a resistance zone around 25 cents.
From my technical perspective, current price activity indicates a notable
risk that Dogecoin might approach the lower end of its consolidation zone.
The 50-day exponential moving average provided a temporary buffer during
Monday’s fall, but consistent selling pressure could push the token towards
the 21-cent floor established in August.
Why Dogecoin price is going down today? Source: Tradingview.com
Seasonal Trends Offer Potential for Optimism
Despite short-term weakness, in my technical analysis, historical patterns
suggest a possibility for recovery. “While some short-term weakness might
occur between now and the end of the month, the market is also moving into
what is historically the strongest period for crypto during the year,”
Kruger noted.
Market analyses suggest that seasonally favorable financial inflows and
market positioning have often paved the way for substantial rallies as the
year concludes. “New record highs for both Bitcoin and Ethereum remain a
possibility if the broader economic environment is supportive,” the LMAX
strategist added.
However, Kruger cautioned that “persistent strength in the dollar or
geopolitical events—ranging from regulatory actions in the U.S. to broader
global political tensions—could further test the resilience of the crypto
market.”
From a technical analysis perspective, significant levels to monitor include
the Bitcoin $105,000 support zone, the Ethereum $4,060 consolidation
floor, the XRP $2.58-$2.70 support range, and the Dogecoin 21-cent August
low. These technical thresholds will likely determine whether the current
correction represents a healthy period of consolidation or the onset of a
more significant bearish trend.
“For the moment, however, the risk assessment leans toward consolidation or
moderate declines unless Bitcoin can decisively overcome overhead resistance,”
Kruger concluded.
Explore more of my posts and analyses related to the cryptocurrency market:
FAQ
Why do crypto markets decline?
The digital currency market is subject to downturns due to a mix of
interconnected elements. Broader economic conditions play a crucial part:
increases in interest rates by central banks make borrowing more expensive,
decreasing the available funds in financial markets, which leads to reduced
investment in higher-risk areas such as crypto. Market mood and speculation
also impact volatility, since prices often shift based more on investors’
emotions than fundamental value. Regulatory developments can also introduce
uncertainty, with governmental crackdowns or new regulations often sparking
panic and increased selling.
Can the crypto market rebound?
Past trends suggest digital currency markets usually recover from pullbacks,
especially during the final three months of the year which has been
typically the strongest period for digital assets. Flows affected by seasonal
factors and strategic positioning by institutional investors commonly create
an environment for year-end surges, with the potential for new record peaks
remaining viable if macroeconomic conditions are positive. However, a
rebound hinges on aspects such as clarity from the Federal Reserve,
regulatory events, and overarching market views on risk assets.
What is the 30 day rule in crypto trading?
The 30-day rule, also known as the wash-sale rule, stops investors from
claiming tax losses if they immediately buy back the identical asset.
However, a majority of digital currencies are not covered by this provision
because they are not considered securities by taxing authorities. In
traditional market environments, investors must wait a period of 30 days
after selling at a loss before buying it back to ensure they can claim the
tax write-off.
What’s Warren Buffett’s opinion on cryptocurrencies?
Warren Buffett has consistently expressed negative views towards digital
currencies, with a well-known phrase calling Bitcoin “rat poison
squared” during a Berkshire Hathaway meeting in 2018. During the 2022
shareholders gathering, he commented: “If you told me you owned all of the
bitcoin in the world and you offered it to me for $25, I wouldn’t take it
because what would I do with it? I’d have to sell it back to you one way or
another. It isn’t going to do anything”. Buffett believes that
cryptocurrencies lack real, underlying value and don’t generate tangible
returns similar to conventional investments.