Why Are Leading Bitcoin and Altcoins Dropping sharply?

Bitcoin has sharply declined from its weekly high of $94,000 to around $90,000, triggering a wave of correction across the entire cryptocurrency market. Many mid-cap and large-cap altcoins such as The Graph (GRT), Story, Algorand (ALGO), and Ethena have recorded declines of over 5%, becoming the most noticeably lagging names in the session. Weak Stock Market Pulls Down Crypto The downturn in the crypto market coincides with the weakening of the US stock market. Investor sentiment has become more cautious amid concerns surrounding the AI sector following mixed earnings reports from major tech companies like Broadcom and Oracle. The Nasdaq 100 tech-heavy index dropped about 500 points, while the S&P 500 and Dow Jones lost 70 and 210 points respectively. Notably, the VIX volatility index increased by more than 2.7% to 16.70 points, reflecting rising risk concerns. At the same time, bond yields surged: the US 10-year government bond yield rose to 4.20%, and the 22-year yield increased to 3.53%, despite the US Federal Reserve (Fed) recently cutting interest rates by 0.25%. These developments indicate that capital is moving away from high-risk assets, including cryptocurrencies. Negative Technical Patterns of Bitcoin From a technical perspective, Bitcoin’s price is sending several concerning signals. Previously, in November, BTC formed a “death cross” pattern when the 50-day moving average crossed below the 200-day moving average — a common bearish indicator in technical analysis. Currently, Bitcoin’s price remains below the Supertrend line as well as all major moving averages. Additionally, a “bearish flag” pattern (bearish flag) has appeared, indicating further downside potential for BTC, possibly retreating to the $75,000 region. If this scenario occurs, altcoin markets are likely to continue experiencing strong selling pressure. Open Interest and Trading Volume Both Decline Another factor contributing to the market decline is the decrease in open interest in the derivatives market. Over the past 4 hours, total open interest has fallen by more than 1.34% to approximately $133 billion. This is an important indicator reflecting leverage usage by investors, and a prolonged downward trend often accompanies selling pressure. Compared to the peak of over $255 billion in October — when the market saw liquidation waves totaling 1.6 million positions — current open interest has decreased significantly. Meanwhile, overall trading volume has dropped by about 15%, to nearly $200 billion, indicating weak buying demand. However, it’s worth noting that reductions in volume and open interest during the late-week period are relatively common, as many investors tend to limit trading during this time. Conclusion Combining macroeconomic factors, technical signals, and derivatives data suggests that the crypto market is facing short-term correction pressures. Amid weakening risk sentiment and unresolved technical indicators, investors should exercise greater caution in managing their positions, especially when engaging in highly leveraged trades.