Key takeaways:
US regional bank stress hit markets as auto sector bankruptcies exposed risky loans, sending financial stock prices sinking.
Bitcoin fell below the 200-day SMA, dropping to $104,500 amid $1.2 billion crypto liquidations.
Analysts viewed $88,000 as the next significant support level for BTC, unless $104,000 holds.
Bitcoin ( BTC ) dropped to $104,000 in a second black Friday event as signs of credit stress among US regional banks triggered a fresh wave of risk aversion across the crypto market.
Bitcoin extends losses as equities slide
Bitcoin price began dropping during the New York trading hours on Thursday as investors turned defensive, with equities slipping, bonds gaining and gold reaching a fresh all-time high .
This came after concerns emerged over looming financial turmoil in the US, with regional banks under pressure due to exposure to two bankruptcies in the auto sector.
Related: Investors are getting better at spotting bad Bitcoin treasuries: David Bailey
First Brands Group, an Ohio-based auto parts supplier with $10 billion in liabilities, and Tricolor Holdings, a subprime auto lender with $1 billion in debt, filed for bankruptcy in late September.
These failures exposed risky lending practices, particularly in private credit markets, sparking fears of contagion.
Zions’ stock sank 13% after disclosing it would take a $50 million loss in the third quarter on two loans from its California division. Western Alliance’s stock slumped 11% after it initiated a lawsuit alleging fraud by Cantor Group V, LLC.
As a result, the S&P 500 dropped by 0.63% to close the day at 6,629.07 on Thursday, while the Nasdaq composite index declined by 107 points (-0.47%). The Dow Jones index lost 0.65% to close the trading day on Thursday at 45,952.24.
This panic rippled into the crypto market, pushing Bitcoin to an intraday low of $104,500, with the total crypto market capitalization dropping by 5% to $3.58 trillion, according to data from Cointelegraph Markets Pro and TradingView .
Bitcoin wipes out liquidity in tumble below $105,000
Bitcoin’s sell-off on Friday extended the deviation from its Oct. 6 all-time high of $126,000 to 16.5% and was accompanied by massive liquidations across the derivatives market.
Related: Bitcoin OG whales to blame for BTC’s painful rise: Willy Woo
More than $935.2 million in long positions were liquidated, with Bitcoin accounting for $317.8 million of that total. Ether ( ETH ) followed with $196.3 million in long liquidations.
Across the board, a total of $1.19 billion was wiped out of the market in short and long positions, as shown in the figure below.
“Another day with a lot of liquidations across the board. It’s not even just longs while the market has been going down,” said trader Daan Crypto Trades on Friday, adding:
“This is exactly what happens after most big flushes. Traders chop themselves up while trying to make back what’s lost.”
Additional data from CoinGlass showed Bitcoin price eating away liquidity around $105,000, with more orders still sitting at $103,500 as shown in the chart below.
This suggests that Bitcoin’s price might drop further to sweep the liquidity within this range before staging a sustained recovery.
How low can Bitcoin price go?
Bitcoin’s drop below $105,000 on Friday saw it lose key support areas, including the 200-day SMA at $107,520.
This has left traders speculating how low the BTC price will go before it finds its footing.
“No reversal in sight at the moment for $BTC,” said analyst Block_Diversity in an X post.
An accompanying chart highlighted key levels to watch on the daily chart, including last Friday’s low on Binance around $101,000, and the demand zones around $95,000 and $88,000.
“These are open targets, unless $BTCstarts getting support at $107.4K.”
“$104K is the HTF level that matters most right here,” said fellow analyst Sykodelic, adding that they expect this area to hold since the daily RSI is now at the lowest level since the $74,000 bottom.
“The weekly close this week will be very important.”
As Cointelegraph reported , with the crypto Fear & Greed Index at yearly lows and at “extreme fear,” it suggests that BTC price might rebound in the short term from current levels.
