The week started with a sharp and prolonged cryptocurrency crash, leading to heavy losses across the market. Over the past three months, key crypto indices (the Emerging Crypto Index, All Crypto Index, and Major Crypto Index) have dropped around 30%.
The downturn has caused many cryptocurrencies to break their bearish bottoms and trade below their long-term averages. Ethereum and solana, for example, are now trading under their 200-day simple moving averages (SMA), which are starting to trend downward.
Volatility, already high, continues to rise as key benchmarks test major support levels and accumulate high overselling levels in oscillators with daily data. Ethereum has dropped below its 2024 low of $2,121, while solana is testing support at $125,442 to $110,025. Bitcoin is nearing the $78,189–$75,955 range, close to its 200-day SMA.
Markets are at a critical juncture. Bulls could see this as a buying opportunity within the broader uptrend, while bears may view it as the start of a downturn. Bitcoin, the largest and most influential cryptocurrency, is key; it is currently above its 200-day SMA and maintaining a bullish background structure.
The correction has been driven by two factors: the recent $1.5m crypto theft from the ByBit crypto exchange, which has shaken market confidence, and disappointment over the US strategic cryptocurrency reserve.
While America’s move towards a strategic crypto reserve signals recognition of crypto’s value (especially bitcoin) as a store of wealth and marks another step towards the normalisation of crypto as an asset, the lack of specific purchase plans and reliance on seized assets has underwhelmed investors. This first step falls short of US president Donald Trump’s campaign promise to make the US the “crypto capital of the world.”
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