The market trapped by the leverage effect
While the crypto market was driven by a declining CPI, on August 18th, it suffered a series of massive liquidations totaling over 500 million dollars in long positions, according to CoinGlass.
This brutal correction, which affected almost all major assets, was fueled by a combination of profit-taking, excessive leverage exposure, and macroeconomic nervousness ahead of Jerome Powell's anticipated speech in Jackson Hole.
Here are the key facts to remember about this day of high volatility:
▫️Over 500 M$ liquidated in 24 hours, including 190 M$ in Ethereum, 120 M$ in Bitcoin, and 20 M$ in XRP;
▫️The longs/shorts ratio reaches 5:1, revealing a dangerous bullish bias;
▫️Bitcoin fell to a floor of 114,706 $, before slightly bouncing around 116,000 $;
▫️XRP temporarily broke its symbolic support of 3 $, signaling increased selling pressure;
▫️The RSI of Bitcoin is at 47, in neutral territory;
▫️The ADX of Bitcoin is at 21, indicating an absence of clear trend, with prices likely moving within a range;
▫️For XRP, the ADX remains locked below 25, suggesting a hesitant market without directional confirmation.
These on-chain data outlines the contours of a feverish market, where excessive optimism begins to find resistance zones. If the long-term structure remains intact for now, short-term indicators show a loss of momentum and increasing difficulty in maintaining the levels reached during the recent rally.
