Bitcoin (BTC) has seen its trading volumes skyrocket by more than 200% in the past 24 hours, following a strong drop to $75,000.
The crypto market seems to have been rattled by the Democrats’ victory over the Republicans in the U.S. mid-term elections.
Now that this party controls both the House of Representatives and the Senate, the market does not see a path forward for the approval of supportive legislation for the crypto sector.
Since this was a positive price driver in August, now that the situation has shifted, we may expect that the crypto market will erase most of the gains that came after the U.S. Securities and Exchange Commission (SEC) approved its new Regulation for Crypto Assets rule.
In addition, President Donald Trump’s ambitions of turning the country into the “crypto capital of the world” may now be crippled by this political setback.
The crypto market could be correcting course after this, and net inflows to exchange-traded funds (ETFs), among other metrics, confirm it.
Long Liquidations Skyrocket to $1 Billion While ETFs Bled $1.3 Billion in a Week
In the past 24 hours alone, over $1 billion worth of long positions have been wiped out as a result of the latest decline. Surprisingly, it was Ethereum (ETH) that took the strongest hit, as the price collapsed below a key support.
Long liquidations for the top altcoin totaled $450 million, while BTC’s stood at $280 million during this period.
Meanwhile, net inflows to ETFs linked to BTC have bled $841 million in the past couple of days and as much as $1.3 billion in the past week, as Wall Street seems to be in full risk-off mode.
Market sentiment has soured as well, as indicated by the Crypto Fear and Greed Index. This gauge has already entered “Fear” territory and currently stands at 28.
This marks a dramatic shift in Sentiment compared to around 45 days ago, back when the Index hit Extreme Greed territory at 80.
Cryptocurrencies remain highly volatile and susceptible to changes in the macro backdrop, geopolitical tensions, and the pace at which supportive legislation advances (or not) in key jurisdictions.
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See all Bitcoin forecastsDaily Chart Suggests Potential Drop to $67K Ahead
Turning to the daily chart, we can see that the price has temporarily bounced off the $75,000 mark during today’s session. However, the token has already dipped below the 200-day exponential moving average (EMA), which explains why liquidations skyrocketed.
If the $75K support is lost, two key support areas still sit below it to contain the sell-off. These are two fair value gaps (FVG) dating back to the August rally.
The faith of this bull market depends on those two levels at $71,500 and $67,000. If BTC fails to bounce off those areas, it is highly likely that we will see the continuation of this downtrend toward the previous cycle’s lows at around $60,000.
Momentum has turned bearish as well, as the Relative Strength Index (RSI) just dipped below 40 — a move that is typically interpreted as a sell signal.