Cryptocurrency Market Faces Challenges During Market Correction

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On the evening of July 23rd, the cryptocurrency market encountered a notable downturn. Ethereum experienced a 4% decrease over the past 24 hours, settling at $3,565, while XRP witnessed a more significant decline of 12.7%, falling to $3.05. BNB and Solana also faced setbacks, dropping by 5.3% and 9.5%, respectively. In contrast, Bitcoin demonstrated relative stability, decreasing by only 0.6% to $117,349, showcasing resilience compared to other leading cryptocurrencies.

What's Driving Crypto Declines?

Presto Research analyst Min Jung suggested that the downturn lacked a distinct catalyst, stating, "Ethereum is still up 7% weekly, and Dogecoin is up 12%. This pullback seems like profit-taking." CoinW's Chief Strategy Officer, Nassar Al Achkar, concurred, emphasizing that short-term profit-taking, leveraged position liquidations, and altcoin rotation ahead of impending ETF decisions have collectively amplified market pressures.

Jung clarified that the underlying market fundamentals remain robust, supported by ongoing substantial institutional treasury acquisitions. Experts also highlighted that investors are keenly observing earnings reports from major technology corporations and macroeconomic data for additional market insights.

Impact of Liquidation Pressure and Market Liquidity

Vincent Liu, CIO of Kronos Research, attributed the market decline to chain liquidations and reduced market depth, further explaining that heavily leveraged long positions in vulnerable altcoins have been unwound.

Coinglass data indicates that $940.81 million in positions were liquidated in the preceding 24 hours, including $168 million in Ethereum and $92.7 million in XRP long positions. Bitcoin experienced $73.5 million in liquidations, with $57.4 million originating from long positions.

Liquidations in the Cryptocurrency Market

LVRG Research director Nick Ruck observed that with declining retail interest, altcoins remain vulnerable. Investors are closely monitoring geopolitical developments, institutional ETF entries, and crucial technical support thresholds. Analysts propose that the market's price fluctuations, combined with the need for a consolidation period, have contributed to increased short-term volatility.

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