Cryptocurrency Market Cap Sheds $200 Billion in Sharp Correction

Key Takeaways:

*Crypto market cap fell below $4T, erasing nearly $200B as BTC dropped ~3% and ETH plunged over 10% before partial rebounds.

*Large-holder selling and leveraged liquidations fueled the sharp decline, leaving sentiment fragile and vulnerable to further downside.

*Despite the correction, Wall Street’s rally on dovish Fed expectations suggests broader risk appetite could help cryptos stabilize.

Market Summary:

The digital asset market experienced a broad-based sell-off during the previous session, with total market capitalization falling nearly $200 billion to dip below the $4 trillion threshold. The decline marked one of the most significant single-day corrections in recent weeks, interrupting a period of sustained gains and signaling a resurgence of bearish pressure.

Bitcoin declined approximately 3%, briefly breaking below the $112,000 support level before paring losses to trade near $113,000. Ethereum faced more pronounced selling, dropping over 10% to test lows near $4,075 before recovering above the $4,200 level. The downturn was largely driven by profit-taking from large wallet holders, which triggered a cascade of liquidations among over-leveraged long positions across major derivatives exchanges.

While prices showed tentative stabilization following the initial plunge, market sentiment remains fragile. The Crypto Fear & Greed Index is likely to retreat further from recent neutral readings, reflecting renewed caution among traders.

Despite the crypto-specific weakness, broader risk appetite remained firm as U.S. equity indices climbed to new record highs, supported by expectations that the Federal Reserve will maintain an accommodative policy stance. This divergence suggests that the cryptocurrency sell-off was driven primarily by internal market dynamics rather than a macro-driven flight from risk. A sustained dovish stance from the Fed may eventually help stabilize digital assets, though near-term volatility is expected to remain elevated.

Technical Analysis 

BTC, D1

Bitcoin has broken below its established uptrend channel, declining nearly 4% in the previous session and signaling a potential shift in near-term momentum. The cryptocurrency faced strong selling pressure after being rejected at the key 61.8% Fibonacci retracement level near $118,000, indicating that buyers lacked the strength to overcome a critical technical barrier.

BTC is now testing crucial short-term support near the $111,335 level. A sustained break below this zone would reinforce the bearish structure and likely open a path toward the next significant support level near $107,000, which aligns with the recent swing low.

Momentum indicators present a mixed but leaning-bearish picture. The Relative Strength Index is hovering near neutral levels, offering limited directional insight, but the Moving Average Convergence Divergence has generated a bearish crossover—often referred to as a “death cross”—at elevated levels. This suggests that near-term momentum is deteriorating, supporting the case for further downside.

Resistance Levels:117,350.00, 123,230.00

Support Levels: 108,240.00, 103,650.00

Solana, D1

Solana has broken decisively below its uptrend support line, declining more than 10% over the past two sessions and signaling a potential reversal of its recent bullish momentum. The cryptocurrency is now testing critical immediate support near the $212.20 level—a zone that will likely determine its near-term directional bias.

A sustained break below this support would confirm a deterioration in market structure and could open the path toward the next significant support level near the $200.00 psychological threshold. The decline reflects a combination of profit-taking after SOL’s strong performance in recent weeks and broader pressure across the cryptocurrency market.

Momentum indicators are aligned with the bearish shift. The Relative Strength Index has declined below its midline, indicating building selling pressure, while the Moving Average Convergence Divergence has generated a bearish crossover at elevated levels—a signal that near-term momentum is turning negative.

Resistance Levels:226.25, 241.30

Support Levels: 212.20, 197.40