The bear market for cryptocurrencies has continued this week, with major currencies like Bitcoin, Solana, Ethereum, and XRP declining by more than 20% from their recent highs.
Where XRP has dropped by more than 38% from its highest level this year, while Bitcoin has moved by 25%, and Ethereum has fallen by 36% from its highest level since the beginning of the year. A bear market is defined as the period during which the price of an asset declines by about 20% or more from its local peak.
The bear market occurs despite some positive news.
This bear market continues despite some positive news in the industry, most notably the recent approvals for ETF funds for Solana, Ripple, Hadera, and Litecoin. The news also included a 500 million dollar investment in Ripple by Citadel and Fortress.
On the other hand, one reason for the continued bear market is the prevalence of fear in the industry. Data collected by CoinMarketCap indicates that the cryptocurrency fear and greed index has moved towards the fear zone at a level of 25.
Notably, this fear is mainly due to the events that occurred last month when more than 20 billion dollars were liquidated in one day, wiping out the accounts of over 1.6 million traders.
Liquidations also remained high over the past few weeks. For example, more than 1.9 billion dollars were liquidated on Friday, led by Bitcoin and Ethereum.
Intense selling and liquidity shifts are weakening the crypto market.
The ongoing fear has led to intense selling by investors in the futures market, with open interest continuing to decline. Additionally, the financing rate for most currencies has remained stable over the past few months, with major Bitcoin holders selling coins worth more than 45 billion dollars.
At the same time, the cryptocurrency market has declined due to reduced market momentum, with many investors shifting towards stocks. Bitcoin has only risen by 2.3% this year, while the S&P 500 and Nasdaq 100 indices jumped by more than 20%.
The technical factors of Bitcoin's price contributed to the market crash.
Technical indicators remain unsupported for the cryptocurrency market, as Bitcoin's price formed a double top at 124,350 dollars, with a neckline at 107,440 dollars. A bearish crossover pattern has also formed after the 50-day weighted moving average crossed with the 200-day moving average.
In addition, the currency remained below the Supertrend indicator and moved to the extreme oversold point according to Wyckoff's theory. Therefore, there is a possibility that it will continue to decline, with the next key level set at 90,000 dollars. This move is expected to increase weakness in the cryptocurrency market.
