Market Correction Continues Amid Risk-Off Sentiment
Bitcoin dropped under $107,000 during Friday’s Asian trading hours, continuing a gradual decline that started earlier this week. The broader crypto market followed suit, with major altcoins showing significant weekly losses. XRP and Cardano’s ADA both fell more than 17% over the past seven days, while Dogecoin and ADA dropped over 20% week-to-date.
Alex Kuptsikevich, FxPro’s chief market analyst, noted that the recent rebound attempt failed to gain momentum. “The market is again testing the strength of 3-month support near current levels,” he explained in an email. The 50-day moving average has been acting as resistance, preventing any meaningful recovery from last week’s liquidation shock.
Liquidity Rotation and Volatility Concerns
The market’s tone has clearly shifted toward risk aversion. Traders have been rotating capital back into stablecoins and away from smaller tokens ahead of key Federal Reserve announcements and ongoing geopolitical tensions. Wenny C., COO at SynFutures, observed that “altcoins are under pressure as liquidity continues to rotate back into Bitcoin and stablecoins amid risk-off sentiment.”
This rotation has been particularly challenging for secondary markets, where thinner order books have amplified price swings. Ether traded around $3,895, while BNB, Solana, and XRP all declined between 5% and 7% – essentially giving back most of their post-crash recovery gains from earlier in the week.
Controlled Deleveraging Rather Than Panic
Despite the widespread red across crypto charts, analysts suggest this pullback appears more like controlled deleveraging than outright panic. Exchange open interest has dropped to midyear lows, which some see as a healthy reset. ETF inflows have remained steady throughout the downturn, indicating that long-term capital isn’t fleeing the market.
Nassar Achkar, chief strategy officer at CoinW, pointed out that “resilient ETF inflows and whale accumulation are stabilizing markets.” He believes leverage flushes tend to create cleaner bases for future moves. The path to sustained recovery, according to Achkar, will depend on how quickly this underlying capital converts into fresh risk-taking.
Federal Reserve Meeting Looms Large
Market attention now turns to the Federal Reserve’s October FOMC meeting, where traders will be watching for dovish signals. Chair Jerome Powell hinted last week that quantitative tightening could soon end, and futures markets currently imply a 65% chance of a 25-basis-point rate cut. Such a move would likely extend risk support into year-end if confirmed.
The current market reset mirrors past cycle pauses where leverage gradually bled out before new capital rotated back in. Whether that rotation happens before or after the next Fed signal will probably define market direction for the remainder of October. Some market participants see opportunity in the turbulence – former BitMEX CEO Arthur Hayes called the drawdown a “buying window,” while K33 Research noted that reduced leverage leaves “room for spot BTC positions to rebuild.”
