When Will the Crypto Market See a Reversal?

The crypto market today has entered retracement mode. This has come after the valuation of the business dropped by 3.32% to $3.76 trillion. However, the daily trading volume has surged by 3.07% to $180.36 billion. This move hints at growing activity during a short-term correction. That being said, as Bitcoin dominance climbs to 61.1%, capital appears to be rotating out of riskier altcoins.

Amidst this downturn, the Fear & Greed Index meter has bogged down to a neutral score of 57, a sign that investor sentiment hasn’t fully flipped bearish. So, let us check what led to the trek down to the south? And how soon can we expect a rebound?

Why the Market Fell: Key Drivers Behind the Decline

The following are the key factors why the crypto market is down today.

1. Whale & Miner Profit-Booking

According to CryptoQuant, Bitcoin miners offloaded ~15,000 BTC worth about $1.8B after the July rally. This is while whales executed their third profit-taking cycle since mid-2024. Additionally, options markets predicted further downside, with traders buying puts anticipating a 10–30% decline.

2. Leverage Liquidation Cascade

The selloff was worsened by a 112% spike in BTC liquidations, totaling $151M , with $143M from long positions. Notably, open interest rose 9.5% even as funding rates plunged 49%, revealing how stretched leverage had become. This caused a cascade of forced selling, dragging the market lower and bringing sentiment down from yesterday’s “Greed” to today’s “Neutral.”

3. Technical Breakdown

The market cap broke below its 7-day SMA at $3.85T and is now testing the 23.6% Fibonacci retracement at $3.82T. With RSI at 42.07, there’s still decent room for a dip before hitting oversold territory. The key level to watch is $3.73T, a break below could invite deeper correction to $3.57T.

Signs of a Bottom?

The Exchange Flow Balance chart, which I’ve shared from Santiment, offers an important clue. Over the past few days:

• BTC shows a streak of net outflows, suggesting whales and long-term holders are removing assets from exchanges.
  
• ETH’s netflow appears neutral-to-slightly-positive, indicating mixed sentiment.
  

This mismatch between price decline and exchange behavior implies that while prices are falling, investors aren’t panic-selling, they may be preparing for a re-entry.

What to Watch Next?

Tonight’s U.S. jobs report could swing short-term sentiment considerably. Weak employment numbers may push rate cut expectations, boosting crypto alongside equities. With SPY-crypto correlation at +0.90, traditional markets will likely dictate the immediate bounce or bleed.

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