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02/02/26 05:18 UTC-04

The main reason for the decline of Bitcoin and the crypto market is low liquidity

Cryptocurrency Cryptocurrency
Cryptocurrency The main reason for the decline of Bitcoin and the crypto market is low liquidity

The cryptocurrency market faced another difficult day as the total market capitalization fell to $2.57 trillion. Bitcoin briefly dropped to around $75,900, losing 13% over the week, while Ethereum fluctuates near $2,226 after losing more than 22% in seven days.

The problems are not limited to the two largest cryptocurrencies: XRP, Solana, BNB, Dogecoin, and Cardano are also deep in the red, indicating selling pressure across the entire market.

At the moment, Bitcoin has stabilized around the $77,000 mark, which now acts as a resistance level. Bitcoin remains slightly below this level, although during the rebound the daily high reached $79,050.

As we can see, volatility is extremely high. After the opening of futures trading in the United States, Bitcoin fell by $1,550 in just 12 minutes, and then rebounded by nearly $1,900 within half an hour. During this chaos, long positions worth nearly $100 million were liquidated within a single hour. Open interest in the market fell by more than 10%, indicating the exhaustion of leverage.

If you think this situation applies only to the crypto market, macro investor Raoul Pal pointed out that U.S. technology stocks are moving almost in parallel. This suggests that the problem is common to all financial markets.

According to Pal, the real issue lies in limited liquidity within the U.S. financial system. Government cash management, a government shutdown, and a lack of new liquidity have led to capital outflows from risk assets. Gold absorbed most of the available capital, although a correction has also appeared in that market.

At the moment, the market is in an “air pocket,” where low liquidity, high fear, and sharp price swings dominate. Until liquidity recovers, volatility in the cryptocurrency market will persist.

See also: "Ethereum cryptocurrency fell by 10% in bearish trading with a pullback"

#Crypto Market #Сrypto market Сrash

Editor: Pereyidenko Ihor
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