Key Takeaways
Why are Bitcoin and Ethereum showing weakness?
Overexposed Bitcoin and Ethereum longs are at risk as macro uncertainty and rising fear keep risk appetite low.
Could this be the start of a bigger market reset?
With $1 trillion wiped from the market and macroeconomic headwinds mounting, the recent pullback could be just the start of a deeper reset.
The bulls still do not consider this “dip” as a buy zone. About $1 trillion has disappeared from the economy total crypto market since the October crash, which saw an average weekly leakage of $230 billion last month.
The result? Fear is at its highest, risk appetite is at its lowest and macroeconomic headwinds are once again playing a role. The newest jobs report showed that 119,000 new jobs were created in September, meaning the chance of an interest rate cut is only 35%.
Meanwhile, other major US data releases have been canceled. Against this backdrop, there are calls for a clean bottom in Bitcoin [BTC] and ether [ETH] could be premature. Instead, the real question is: are we looking at the beginning of a new cascade?
Bitcoin and Ethereum are struggling because the long term remains overexposed
Top caps are being hit by the continued indecisiveness in the market.
Over the past 24 hours, sentiment has sunk deeper into ‘fear’. At the time of writing, Bitcoin was to cling above $86,000 – A development that now has traders wondering if a short-term bottom could form after a 20% decline in the past three weeks.
However, an intraday decline of 0.6% was enough to break that level. It sent BTC to $85,300, confirming weak bidding support. The result? The 24H Coinglass heatmap recorded $957 million in liquidations, wiping out 88% of the longs.
Source: Coinglass
Essentially, betting on the upside with this level of volatility is a risky gamble.
And yet the culprit is BTC/USDT long/short ratio on Binance still showed a long skew of 80% on the 4-hour chart. This underscored how traders are leaning heavily on longs despite the weakness.
Remarkably, Ethereum may follow the same pattern and BTC will follow almost tick by tick. With a 0.35% intraday dipETH broke below $2.8k and slowly slid back into the late Q2 range.
Due to the volatility, these high, overexposed long positions are clearly at risk. This begs the question: is Bitcoin and Ethereum’s weakness more than just a short-term pullback? Or are we on the brink of a larger, complete market reset?
Macro Bubble Formation – Is a Burst Imminent?
Looking at the macro photo, it looks like the reset has only just begun.
There has been optimism over the past month interest rate cuts has taken a big blow. Strikingly, what was once 98.8% is now only 35.4%, signaling a clear shift from cautious optimism to outright fear.
This shift is also reflected in the charts. The Fear and Greed Index has been in the red for six days in a row. However, in the last 24 hours it fell 4 points to 11, falling even below the April FUD level and hitting a low.
Source: CoinMarketCap
In short, the macro bubble continues to build, fueled by bearish catalysts.
From data blackouts and a strong US labor market to declining labor markets The return on government bonds and the AI-driven stock saleAll this keeps interest rate cuts off the table. That makes overexposed Bitcoin and Ethereum longs look like a ticking time bomb.
As a result, the recent weakness could well be the start of a deeper reset, leaving bids on the sidelines as fear continues to run high. IThis in turn leaves the key Bitcoin and Ethereum levels exposed to deeper pullbacks.