Key takeaways
Why are Bitcoin and Ethereum showing weakness?
Overexposed long positions in Bitcoin and Ethereum are at risk as macroeconomic uncertainty and rising fear keep risk appetite low.
Could this be the start of a broader market reset?
With $1 trillion removed from the market and macroeconomic headwinds piling up, the recent pullback may be just the beginning of a deeper reset.
The bulls are not yet treating this “dip” as a buy zone. Around $1 trillion has been wiped from the total crypto market capitalization since the October crash, with an average of $230 billion leaking each week over the past month.
The result? Fear is at an all-time high, risk appetite at an all-time low, and macroeconomic headwinds are back in play. The latest jobs report showed 119,000 new jobs were added in September, reducing the odds of a rate cut to just 35%.
Meanwhile, other major U.S. data releases were canceled. In this context, a clean fund in Bitcoin is requested [BTC] and ethereal [ETH] it could be premature. Instead, the real question is: are we at the beginning of another waterfall?
Bitcoin and Ethereum Struggle as Longs Remain Overexposed
Large cap companies are being affected by the current indecision in the market.
In the last 24 hours, sentiment has sunk deeper into “fear.” At the time of writing, Bitcoin was holding above $86,000, a fact that now has traders wondering if a short-term bottom could be forming after a 20% drop over the past three weeks.
However, a 0.6% intraday drop was enough to break that level. It sent BTC to $85,300, confirming weak supply support. The result? The 24-hour Coinglass heat map recorded liquidations worth $957 million, of which 88% were erased from long positions.
Source: Coinglass
In essence, betting on the upside with this level of volatility is a risky bet.
And yet, the BTC/USDT long/short ratio on Binance was still showing an 80% long bias on the 4-hour chart. This underlined how traders have leaned heavily toward long positions despite the weakness.
Notably, Ethereum may be following the same pattern, tracking BTC almost ticking. With an intraday drop of 0.35%, ETH broke below $2,800, slowly sliding back towards its late Q2 range.
With volatility this high, overexposed long positions are clearly at risk. This begs the question: is Bitcoin and Ethereum’s weakness more than just a short-term pullback? Or are we on the verge of a major, full-blown market reset?
Creation of a macrobubble: is a burst imminent?
Looking at the macro image, it looks like the reboot is just beginning.
Over the past month, optimism around rate cuts has taken a serious hit. In particular, what was once 98.8% is now just 35.4%, indicating a clear shift from cautious optimism to outright fear.
This change is also reflected in the graphs. The Fear and Greed Index has been in the red for six consecutive days. However, in the last 24 hours, it fell 4 points to 11, falling even below the April FUD level and reaching an all-time low.
Source: CoinMarketCap
In short, the macro bubble continues to grow, driven by bearish catalysts.
From data blackouts and a strong US labor market to falling Treasury yields and AI-driven stock sell-offs, all of this is keeping rate cuts off the table. That makes the overexposed longs of Bitcoin and Ethereum look like a ticking time bomb.
As a result, the recent weakness could be just the beginning of a deeper reset, leaving bids on the sidelines as fear continues to rise. YoIn turn, this keeps key Bitcoin and Ethereum levels exposed to deeper pullbacks.