Bitcoin and Ethereum sink to 3-month lows, but a bigger crypto selloff may be ahead

Bitcoin and Ethereum fell to three-month lows Thursday, deepening a cryptocurrency selloff that has erased $550 billion in market value since October.

Bitcoin slumped to $71,317, its lowest level since August, while Ethereum briefly fell below $2,000 to touch $1,983. The declines have pushed the broader crypto market's valuation from approximately $2.94 trillion in early October to $2.39 trillion.

The downturn has coincided with a sharp deterioration in market sentiment. CryptoQuant's Analyst Consensus Index fell from -1.0 to -1.8 standard deviations over seven days, signaling increasingly bearish expectations as investors grapple with persistent selling pressure and uncertainty over the market's next direction.

Bitcoin and Ethereum selloff triggers $727 million liquidation wave

The latest price decline triggered widespread losses across cryptocurrency derivatives markets as leveraged traders were caught on the wrong side of the downturn.

According to CoinGlass, 125,731 traders were liquidated over 24 hours, with closed positions totaling about $727 million.

Bitcoin accounted for $293.8 million of those liquidations, with bullish positions representing 91.1% of the total. Ethereum followed with $120.2 million, of which 87.7% came from traders betting on higher prices.

Together, Bitcoin and Ethereum accounted for approximately $414 million, or 57% of the market-wide total.

The selling intensified during a four-hour period when nearly $489 million in leveraged positions were liquidated. Long positions accounted for approximately $446 million of those losses, compared with $44 million in short positions.

The largest individual liquidation was a $31 million Bitcoin position on decentralized derivatives exchange Hyperliquid.

The concentration of losses among bullish traders illustrates how the price decline forced exchanges to close leveraged positions, adding to selling pressure as the market struggled to find support.

The downturn comes during weakening institutional demand and contracting liquidity across the crypto market.

Data from SoSoValue showed that US spot Bitcoin exchange-traded funds have recorded approximately $2 billion in net outflows over the past three weeks. Ethereum-focused products are also heading toward a seventh consecutive week of withdrawals, with more than $2.1 billion leaving the funds during that period.

The sustained withdrawals have coincided with a broader contraction in available crypto liquidity.

The supply of major dollar-linked stablecoins contracted by $14.2 billion over 30 days, while Bitcoin's apparent demand declined by 284,000 BTC.

These developments suggest that the latest liquidation wave struck a market already struggling to attract fresh capital, leaving fewer sources of demand to absorb the selling pressure.

BTC's technical breakdown raises risk of deeper decline toward $52,700

Beyond the immediate selling pressure, Bitcoin's deteriorating technical structure and historical valuation indicators point to the market could face further losses before establishing a durable bottom.

The cryptocurrency has fallen below its 200-day moving average, which stood near $73,200, breaking a widely followed trend indicator used to assess the broader direction of prices.

The breakdown has shifted attention toward lower price levels where traders expect buying interest to emerge.

According to CoinGlass, Bitcoin's liquidation heatmap identifies approximately $68,000 as the next potential support region. A decline toward that level would extend the current downturn and test whether buyers can absorb additional selling pressure.

However, historical on-chain valuation data shows that Bitcoin could face a considerably deeper correction if market conditions continue to deteriorate.

Joao Wedson, chief executive of blockchain analytics firm Alphractal, highlighted Bitcoin's Cumulative Value Days Destroyed (CVDD) indicator, which currently places a historical bear-market valuation reference near $52,700.

The metric uses the value and age of Bitcoin moving on-chain to identify price regions associated with previous market bottoms.

At a Bitcoin price of $72,500, the cryptocurrency was trading approximately 37.7% above the CVDD level. A complete retest would imply a further decline of roughly 27% from that reference price.

Wedson pointed to previous market cycles in which Bitcoin approached or briefly traded below the indicator.

In December 2018, Bitcoin bottomed near $3,122 against a CVDD reading of $3,060. Similarly, the November 2022 market bottom occurred around $15,479, slightly below the indicator's $15,900 valuation.

Comparable patterns emerged during the January 2015 and March 2020 downturns, when Bitcoin traded below the metric before eventually recovering.

Still, the historical relationship does not establish that Bitcoin must revisit $52,700 during the current downturn.

Unlike a fixed technical support level, CVDD changes with on-chain activity as older Bitcoin moves between wallets. Its valuation threshold can rise over time, potentially narrowing the gap between the indicator and market prices without requiring an equivalent decline in Bitcoin.

That leaves the market facing two distinct price tests: whether buyers can defend the $68,000 region identified by CoinGlass, and whether a sustained recovery can push Bitcoin back above its 200-day moving average.

A failure to stabilize around those levels would strengthen concerns that the latest selloff is developing into a more prolonged correction, bringing the deeper historical valuation levels highlighted by Wedson into focus.