Crypto Euphoria Fades Into Brutal Correction

After weeks of bullish euphoria, the crypto market violently corrected, revealing an underlying tension ignored for too long. In just 24 hours, over 500 million dollars of long positions were liquidated, dragging down bitcoin, Ethereum, and XRP in their fall. This brutal wave revealed the fragility of a market fueled by leverage, where technical indicators, sidelined by optimism, suddenly regain all their importance. A return to reality is necessary for investors.

Series of liquidations : market caught by the leverage effect

While the crypto market was fueled by a declining CPI, on August 18, it endured a series of massive liquidations totaling more than 500 million dollars of long positions, according to CoinGlass.

This brutal correction, which affected almost all major assets, was fueled by a combination of profit-taking, excessive leverage exposure, and macroeconomic nervousness ahead of Jerome Powell’s highly anticipated speech at Jackson Hole.

Here are the key facts to remember from this day of high volatility :

• Over $500M liquidated in 24h, including $190M on Ethereum, $120M on Bitcoin, and $20M on XRP ;

• The longs/shorts ratio reached 5:1, revealing a dangerous bullish bias ;

• Bitcoin dropped to a floor of $114,706 before slightly rebounding around $116,000 ;

• XRP temporarily broke its symbolic support at $3, signaling increased selling pressure ;

• Bitcoin’s RSI is at 47, in the neutral zone ;

• Bitcoin’s ADX is at 21, indicating no clear trend, with prices likely to move in a range ;

• For XRP, the ADX remains stuck below 25, suggesting a hesitant market without directional confirmation.

These on-chain data outline a fragile market where excess optimism begins to clash with resistance zones. While the long-term structure remains intact for now, short-term indicators highlight a loss of momentum and increasing difficulty in maintaining levels reached during the recent rally.

Ethereum, the technical counter-example that intrigues analysts

While bitcoin and XRP struggle to maintain their technical supports, Ethereum shows a more robust chart structure despite a marked correction. The market’s second-largest capitalization recorded a 3.3% drop, sliding from $4,475 to $4,279, but retains encouraging indicators.

Its RSI stands at 61, indicating that buying pressure remains dominant despite the pullback. Even better, Ethereum’s ADX peaks at 46, well above the 40 threshold that signals a strong trend. For analysts, this could confirm an underlying bullish momentum still intact.

This technical divergence is also visible on exponential moving averages (EMA) : Ethereum’s 50 EMA remains well above its 200 EMA, providing a safety cushion for bullish investors even in case of a prolonged correction.

Furthermore, the Squeeze Momentum indicator is currently “disabled”, reflecting an end to the extreme volatility phase and the potential entry into a controlled consolidation phase. On the sentiment side, predictive markets show moderate optimism. On the Myriad platform, 77 % of participants anticipate a new ATH for Ethereum by the end of this year, compared to 93 % the previous week. The euphoria is easing, but confidence remains mostly bullish.

This relative resilience of Ethereum in a generally bearish context could redefine some short-term allocation strategies. While the crypto market seems to be losing confidence in bitcoin and XRP, Ethereum’s attractiveness might be strengthened.