Bitcoin Slides Into Danger Zone, But A RSI Divergence Hints At A Turnaround

By Vicky Ge Huang and Caitlin Ostroff

The rally in crypto prices this year was boosted by a large heap of debt, with traders using leverage to amplify their gains. Now, after a punishing selloff in the past two weeks, the dangers of those bets are becoming apparent.

Investors have never had more ways to place complex wagers on crypto. In some cases people can put down $1 of their own money to gain exposure to $100 of bitcoin. It is a strategy that can produce windfall profits — when the market breaks the borrower's way. If it goes in the wrong direction, traders can be on the hook for big losses and can see their holdings liquidated if they don't post sufficient funds.

Daily total liquidations on crypto exchanges have been on the rise this year. But in October, they shot up to a record high, according to data from CoinGlass, after President Trump's surprise tariff announcement against China triggered a crypto selloff that compelled exchanges to close out underwater positions.

"In the end, it really comes down to the fact that you can invest with more means than you have, but it also means that you will get punished for not managing your risks accordingly," said Nicolai Søndergaard, a research analyst at crypto data firm Nansen.

Pressure on leveraged traders has been one of the main story lines in crypto's recent skid. Bitcoin has lost roughly 27% of its value since hitting a record high above $126,000 in October, with investors' retreat from riskier trades dragging the largest cryptocurrency to a recent $92,000, its lowest level since April.

"The last two weeks have been really rough for a lot of people," said Kevin Wan, a 33-year-old individual investor who has been trading cryptocurrencies since 2013.

Wan started selling bitcoin short, betting on its decline, once the token touched $106,000. He borrowed on a crypto exchange to give him 20 times leverage on his trade. When bitcoin fell, Wan said, he made about $120,000.

"I've learned from previous cycles to put money away in places where you can't really access it," he said. "Because it's really easy to get into a mindset of revenge trading and then just having a downward spiral of performance when the market is hard."

Bitcoin's recent crash has also pulled down the shares of crypto-treasury companies. For much of the year, these companies sold stock or borrowed money to plow the proceeds into bitcoin, ether and other cryptocurrencies.

Strategy, a firm that pioneered the use of corporate funds to accumulate bitcoin, has tumbled 29% in the past month. BitMine Immersion Technologies, an ether-treasury company backed by Peter Thiel and run by veteran Wall Street strategist Tom Lee, is down 35%. Both stocks are well off the pace of bitcoin itself, which has fallen 13% in that same period.

Regulated institutions and fast-money traders alike are now pushing complex strategies such as options and futures, so-called treasury stocks and even crypto lending.

In years past, U.S. investors haven't had access to many of the riskier strategies that crypto investors have used in other markets. But that began to change this year, with Trump's re-election ushering in a more crypto-friendly Washington.

This summer, Coinbase, the largest U.S. exchange, launched perpetual futures, a type of financial contract that never expires and lets traders bet on digital tokens' rise using up to 10 times leverage. Cboe plans to launch bitcoin and ether continuous futures with 10-year expirations in December.

Crypto lending is also making a comeback. The practice, a staple in the market's 2021 run-up, looks a lot like traditional banking. A lender takes in deposits from one set of customers, and then lends those funds out to a different group at a higher interest rate than it pays depositors.

But in the crypto markets, lenders typically offer depositors much higher yields than those available in dollar-based bank savings accounts. When crypto markets tumbled in 2022, many of these lenders collapsed.

The dollar-denominated value of outstanding loans from centralized crypto lenders and decentralized lending platforms ballooned to a record high around $74 billion at the end of September, exceeding the previous record of $69 billion set in the fourth quarter of 2021, according to research from Galaxy Digital.

While bitcoin's recent selloff has wiped out some leveraged bets, traders expect it to tick back up.

"Until there's some sort of overriding body that says this is where you have to cap leverage, I just can't see that changing," said Jake Ostrovskis, head of over-the-counter trading at crypto firm Wintermute.

Write to Vicky Ge Huang at vicky.huang@wsj.com and Caitlin Ostroff at caitlin.ostroff@wsj.com

Kraken says it’s now valued at $20 billion after an $800 million funding round it said would support the US-based crypto exchange’s global expansion. 

Kraken said on Tuesday that it raised the capital across two tranches, with the second tranche including a $200 million strategic investment from US market-making giant Citadel Securities at a $20 billion valuation.

It also included a strategic partnership with Citadel, which also pitched in to Ripple’s $500 million raise earlier this month, which will see the firm offer Kraken expertise on differentiated liquidity provision, risk management and market structure insights.

Kraken’s primary tranche included backing from Jane Street, DRW Venture Capital, HSG and Tribe Capital, alongside a “significant commitment” from the family office of Kraken Co-CEO Arjun Sethi.

U.S. Senate Banking Chair Tim Scott said Tuesday that he aims to have the committee vote on the crypto market structure bill next month.

"By the end of this year, next month, we believe we can mark up and vote in both committees and get this to the floor of the Senate early next year so that President Trump will sign the legislation," Scott said Tuesday on Fox Business' Mornings with Maria.

The market structure legislation requires approval from both the Senate Banking and Agriculture committees, as it deals with both securities and commodities regulations.

Scott said the legislation would protect consumers while helping cement America's dominance as the world's most powerful economy for the next century. The Republican senator unsuccessfully pushed to pass the bill by September this year, for which he blamed the Democrats.

"The Democrats have been stalling and stalling and stalling because they don’t want President Trump to make America the crypto capital of the world," Scott said in the Tuesday appearance on Fox Business. "It’s not just for President Trump, it’s for the American people."

The Senate has been working on its own crypto market structure legislation after the House passed its version — the CLARITY Act — this summer. 

The Republican-led Senate Banking Committee seeks to delineate jurisdiction between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), while creating a new term for "ancillary assets" to clarify which cryptocurrencies are not securities. Republicans would need Democratic support to advance the bill. 

Amid ongoing bipartisan discussions on the legislation, a proposal from Senate Democrats was leaked. The six-page proposal focused on decentralized finance and would task the Treasury Department and other financial regulators with defining when an entity or person "exercises control or sufficient influence." This draft drew heavy criticism from many in the crypto industry, with some arguing it would essentially ban DeFi. 

Following the incident, both the Senate Democrats and Republicans each held meetings with industry leaders. Solana Policy Institute President Kristin Smith, who was present at the Democrat meeting, told The Block that there is a group of Democratic Senators that want to "get this done."

Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.

© 2025 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The crypto market is showing signs of life again after a dramatic shakeout earlier today. Bitcoin, which briefly fell below $90,000 for the first time in seven months, has bounced back toward the $94,000 zone. The recovery comes as the broader market turns slightly positive, with global crypto market capitalization rising 1.4 percent to $3.16 trillion.

Most altcoins are trading in the green, including Ethereum, XRP, Solana, Cardano, Dogecoin and BNB. The rebound follows a wave of volatility triggered by heavy liquidations, a macro-driven sell-off in tech stocks, and speculation surrounding political and regulatory risks.

Bitcoin Reclaims Ground After Liquidations

Bitcoin is now trading near $92,500 after recovering from its morning low of $89,000. Analysts say the plunge was driven by forced liquidations and investors fleeing risk assets. More than $620 million in positions were wiped out in 24 hours as BTC tested key support.

Despite the panic, Bitcoin quickly stabilized. Traders point out that BTC’s earlier fall mirrored this month’s broad sell-off in AI-related tech stocks, suggesting a shift toward “risk-off” behavior in global markets.

Ethereum and XRP Follow the Bounce

Ethereum is up around $3,110 with a 3% gain in the past day, while XRP trades near $2.21 after rising more than 3 percent. XRP’s move follows strong interest in the newly launched spot XRP ETF in the U.S., which recorded nearly $60 million in first-day volume, this year’s highest opening for any ETF.

Altcoins including Solana, TRON, Dogecoin and Cardano have also turned positive after the early-morning chaos.

Why the Market Dropped And Why It’s Recovering

Experts say the downturn was caused by a mix of macro stress and crypto-specific pressure:

• Investors dumped speculative tech and crypto assets as markets weakened.

• U.S. senators demanded an investigation into World Liberty Financial over alleged token ties to North Korea and Russia.

• Rising token supply, new listings, and the growth of memecoin markets added downward pressure.

• Expectations shifted around how much the U.S. Federal Reserve might ease rates.

But the quick rebound shows that underlying interest in digital assets remains strong. 

ETF Growth Adds Support Across the Market

New spot ETFs, including XRP, Litecoin and upcoming Avalanche products, are giving both institutions and retail investors more ways to enter the market. This increased access is helping stabilize prices during moments of panic.

Bitcoin price found support near $89,250. BTC is now correcting some losses but faces many hurdles near $93,500 and $94,200.

• Bitcoin started a fresh decline below $94,000 and $93,500.
• The price is trading below $93,000 and the 100 hourly Simple moving average.
• There is a bearish trend line forming with resistance at $94,200 on the hourly chart of the BTC/USD pair (data feed from Kraken).
• The pair might continue to move down if it settles below the $90,700 zone.

Bitcoin Price Attempts Recovery

Bitcoin price failed to stay in a positive zone above the $92,500 level. BTC bears remained active below $92,500 and pushed the price lower.

The bears gained strength and were able to push the price below the $90,000 zone. A low was formed at $89,252, and the price is now attempting a recovery wave. There was a move above the 50% Fib retracement level of the recent decline from the $95,888 swing high to the $89,252 low.

Bitcoin is now trading below $94,000 and the 100 hourly Simple moving average. Besides, there is a bearish trend line forming with resistance at $94,200 on the hourly chart of the BTC/USD pair.

If the bulls attempt another recovery wave, the price could face resistance near the $93,350 level and the 61.8% Fib retracement level of the recent decline from the $95,888 swing high to the $89,252 low. The first key resistance is near the $94,200 level and the trend line.

The next resistance could be $95,000. A close above the $95,000 resistance might send the price further higher. In the stated case, the price could rise and test the $95,500 resistance. Any more gains might send the price toward the $96,500 level. The next barrier for the bulls could be $96,800 and $97,000.

Another Decline In BTC?

If Bitcoin fails to rise above the $94,200 resistance zone, it could start another decline. Immediate support is near the $91,500 level. The first major support is near the $90,700 level.

The next support is now near the $90,000 zone. Any more losses might send the price toward the $88,800 support in the near term. The main support sits at $86,500, below which BTC might accelerate lower in the near term.

Technical indicators:

Hourly MACD – The MACD is now losing pace in the bearish zone.

Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is now above the 50 level.

Major Support Levels – $91,500, followed by $90,700.

Major Resistance Levels – $93,250 and $94,200.

Shares in Canaan surged on Tuesday after the Bitcoin mining hardware maker reported its third-quarter revenues doubled from last year, driven by a high demand for equipment as multiple miners saw revenues increase.

Canaan said on Tuesday that its total Q3 revenues increased 104% from last year to $150.5 million due to a “substantial volume of new orders,” with its mining equipment revenues making up the lion’s share at $118.6 million.

James Jin Cheng, the miner’s chief financial officer, said in the company’s earnings call that a large number of sales came from clients in the US, who “started actively placing sizable and repeating orders.”

“Sales of North American customers contributed 31% of our total revenue in quarter three. We are happy to witness the strong demand recovery of the North American market,” he added.