Crypto market crashes as liquidations jump: reasons a bull run may be near

The crypto market crash continued on Tuesday, with Bitcoin plunging below the important support level at $90,000. Most altcoins were in the red, with their market capitalization falling to $3..07 trillion from $4.27 trillion in October.

Reasons for the ongoing crypto market crash

There are a few reasons why the crypto market crash is happening. One of them is that liquidations soared by 57% to over $1 billion. Nearly 200,000 traders were liquidated, with one Bitcoin whale losing $97 million.

Bitcoin liquidations jumped to $563 million, while Ethereum positions worth over $175 million were liquidated. Liquidations have remained at an elevated level in the past few weeks, pushing more investors to stay on the sidelines.

Bitcoin and Ethereum ETF outflows continued

The crypto market crash also happened as ETF outflows continued. All spot Bitcoin ETFs shed over $254 million in assets on Monday, the fourth consecutive day of losses. They have shed almost $2 billion in assets in the last 4 trading days.

Similarly, Ethereum ETFs have continued to shed assets this week. They had over $182 million in outflows, bringing all outflows this month to over $1.42 billion. These numbers mean that there is less demand for these coins from American investors.

Nvidia earnings jitters

The crypto market crash coincided with the performance of stocks. Data shows that the top American indices like the Nasdaq 100, S&P 500, and Dow Jones dropped by over 1% on Monday. This decline happened as market participants waited for the upcoming Nvidia earnings, which will come out on Wednesday this week.

Nvidia is one of the most important companies this cycle because of its role in artificial intelligence (AI), where it provides the most advanced GPUs, which are used by top companies like Microsoft, Google, and Amazon.

Analysts expect the upcoming results to show that Nvidia’s business continued doing well in the third quarter, with its revenue expected to come in at $55 billion and its earnings-per-share (EPS) surging to $1.25.

Strong Nvidia earnings and guidance will provide more information about the ongoing AI spending and what to expect in the coming months. These numbers will likely boost the performance of the stock and crypto markets.

Why a cryptocurrency market recovery is possible

Historically, such periods of despair have proven to be the best times to buy. A good example of this is what happened in April when Donald Trump announced his reciprocal tariffs, leading to a strong crash of Bitcoin and other altcoins.

One sign that a crypto market bull run is around the corner is the fact that there is extreme fear. The Crypto Fear and Greed Index has plummeted to the extreme fear zone of 14. In most cases, crypto bull runs happen when investors are extremely fearful. Bear markets, on the other hand, as shown below, the crypto bear market normally starts when investors are greedy.

The other reason why a crypto market recovery is possible is that analysts believe that we are still in the bull market cycle. In a statement, Tom Lee, the head of BitMine said:

“When a market maker has a ‘hole’ on their balance sheet, they are seeking to raise capital and are reducing their liquidity functions in the market. This is the equivalent of quantitative tightening for crypto and has the effect of dampening prices. In 2022, this QT effect lasted for 6-8 weeks. And this is probably happening today.”

The crypto market may also recover because most coins have now become highly oversold. For example, the Relative Strength Index (RSI) of the total crypto market cap has dropped to 29, while the Stochastic has moved to below 10. Oversold conditions normally attract dip buyers.

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