Key Takeaways
Why is Bitcoin and Ethereum showing weakness?
Overexposed Bitcoin and Ethereum longs are at risk, as macro uncertainty and rising fear keep risk appetite low.
Could this be the start of a larger market reset?
With $1 trillion wiped from the market and macro headwinds piling up, the recent pullback may be just the beginning of a deeper reset.
The bulls still aren’t treating this “dip” as a buying zone. About $1 trillion has been erased from the total crypto market cap since the October crash, with an average of $230 billion leaking out every week over the past month.
The result? Fear is at its highest, risk appetite at its lowest, and macro headwinds are back in play. The latest jobs report showed 119,000 new jobs added in September, pushing the odds of a rate cut down to just 35%.
Meanwhile, other major U.S data releases have been canceled. Against this backdrop, calling for a clean bottom in Bitcoin [BTC] and Ethereum [ETH] might be premature. Instead, the real question is – Are we looking at the start of another cascade?
Bitcoin and Ethereum struggle as longs remain overexposed
Top caps are taking the hit from the ongoing indecision in the market.
In the last 24 hours, sentiment has slipped deeper into “fear.” At the time of writing, Bitcoin was holding above $86k – A development which now has traders wondering if a short-term bottom might be forming after a 20% slide over the past three weeks.
However, a 0.6% intraday drop was enough to break that level. It sent BTC down to $85,300, confirming weak bid support. The result? The 24H Coinglass heatmap recorded $957 million in liquidations, with 88% wiped from longs.
Source: Coinglass
In essence, betting on the upside with this level of volatility is a risky bet.
And yet, the BTC/USDT perp long/short ratio on Binance was still showing an 80% long skew on the 4-hour chart. This underlined how traders have been leaning heavily into longs despite the weakness.
Notably, Ethereum may be following the same pattern, tracking BTC almost tick-for-tick. With a 0.35% intraday dip, ETH broke below $2.8k, slowly sliding back towards its late-Q2 range.
With volatility this high, overexposed longs are clearly at risk. This raises the question – Is the weakness in Bitcoin and Ethereum more than just a short-term pullback? Or are we sitting on the edge of a larger, full-blown market reset?
Macro bubble building – Is a burst imminent?
Looking at the macro picture, it looks like the reset is just getting started.
Over the past month, optimism around rate cuts has taken a sharp hit. Notably, what was once 98.8% now sits at just 35.4%, signaling a clear shift from cautious optimism to outright fear.
This shift is reflected on the charts as well. The Fear and Greed Index has been in the red for six consecutive days. However, in the last 24 hours, it slipped 4 points to 11, dropping below even the April FUD level and hitting an all-time low.
Source: CoinMarketCap
In short, the macro bubble keeps building, fueled by bearish catalysts.
From data blackouts and a strong U.S. labor market to falling Treasury yields and the AI-driven stock sell-off, all of this is keeping rate cuts off the table. That makes overexposed Bitcoin and Ethereum longs look like a ticking time bomb.
As a result, the recent weakness might just be the start of a deeper reset, leaving bids on the sidelines while fear continues to run high. In turn, this keeps key Bitcoin and Ethereum levels exposed to deeper pullbacks.
