The crypto market is down today due to heightened risk aversion, led by the latest Iran-Israel conflict, which has already caused about $2.5 billion in liquidations.
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The cryptocurrency market is down today, with the total market capitalization falling by 8.7% to $2.17 trillion in the past 24 hours.
BTC $64,700, the largest cryptocurrency by market capitalization, is leading the decline by falling 7.5% in the last 24 hours to reach around $62,160 on April 14. Ether
ETH
$3,059, the second-largest crypto, has dipped 10.6% to trade around $2,900 in the same period.
TOTAL crypto market capitalization vs. BTC/USD and ETH/USD daily performance chart. Source: TradingView
Israel-Iran conflict spurs risk aversion
The crypto market’s recent 24-hour downturn is part of a broader correction that began on April 12. This period has coincided with escalating tensions between Iran and Israel following Iran’s launch of attack drones and missiles in retaliation for an Israeli strike in Syria.
Risk-on traders exercised extreme caution in the hours before and after the attack, moving capital away from riskier markets like crypto and seeking safety in safer havens like the U.S. dollar.
Source: X
Consequently, the U.S. dollar, which measures the greenback’s strength against a basket of top foreign currencies, has appreciated by 0.79% since April 12.
DXY daily price chart. Source: TradingView
The crypto market is stabilizing on April 14, taking cues from Iran’s confirmation that it had concluded its military operations against Israel. Meanwhile, many analysts are confident that the market’s decline is “normal” and that it will soon resume its uptrend.
Source: X
Nearly $2.5 billion worth of crypto positions liquidated
Since April 12, the crypto market has witnessed liquidations worth about $2.5 billion, including approximately $964 million worth of liquidations in the last 24 hours alone. Notably, long liquidations have significantly outnumbered short liquidations.
Total crypto market liquidations in the last 24 hours. Source: Coinglas
A predominance of long liquidations suggests that the crypto market was overleveraged on the bullish side, primarily due to growing euphoria around Bitcoin ETF inflows and the Bitcoin Halving 2024.
Traders borrowing capital to take larger positions in anticipation of market gains got caught in sudden market downturns prompted by the Iran-Israel conflict, leading to massive long liquidations. That exacerbated the crypto market’s downside.
A technical correction?
Today’s decline in the crypto market is also part of a corrective movement within what appears to be a bull flag pattern.
Since March 13, the market has consistently failed to surpass the upper trendline of the bull flag. Previous attempts to break above this level have led to declines toward the flag’s lower boundary.
Crypto market cap. Source: TradingView
As of April 14, the market was testing this lower trendline again, potentially setting the stage for a rebound toward the upper trendline — a jump from $2.15 trillion to over $2.5 trillion by April’s end. Meanwhile, more gains could follow if the market breaks above the flag’s upper trendline.
As a rule of technical analysis, bull flags are bullish continuation patterns that resolve when the price breaks above the upper trendline and rises by as much as the previous uptrend’s height. That puts the crypto market on a path to $3.1 trillion, up around 40% from current levels.
