Bitcoin and Ethereum slide sharply as traders hit pause ahead of U.S. jobs data and the Bank of Japan rate decision, while bearish charts and dwindling leverage hint the crypto sell-off may have further to run.
Summary
- The crypto market is going down ahead of key macro data from the US
- It also dropped ahead of the Bank of Japan interest rate decision.
- Traders continued to delever, with futures open interest falling by nearly 4%.
Bitcoin (BTC) dropped to $86,980, down by nearly 9% from its highest point this month. Similarly, Ethereum (ETH) token dropped to the critical support level at $3,000, much lower than last week’s high of $3,468.
Crypto market dips ahead of key macro data
Investors are awaiting key U.S. macroeconomic data. The Bureau of Labor Statistics is set to publish the latest non-farm payroll data on Tuesday.
Economists polled by Reuters expect the upcoming report to show the labor market was sluggish in October, as companies remained wary due to tariffs. The average estimate is that the economy added 55k jobs, down from 110,000 in the previous month.
The Bureau of Labor Statistics will then release the latest consumer inflation report on Thursday. These numbers come a week after the Federal Reserve slashed interest rates by 0.25% and hinted of one more cut in 2026.
BoJ interest rate decision ahead
Investors are also waiting for the upcoming Bank of Japan interest rate decision on Friday.
Economists and traders expect the bank to raise rates by 0.25% for the first time in over 11 months, as inflation remains above 2%.
Traders are wary of what happens when the BoJ hikes rates while the Fed is cutting. The reduced spread between the two countries often leads to the winding down of the popular carry trade.
Bitcoin and most altcoins have historically dropped whenever the BoJ hikes interest rates.
Bitcoin and Ethereum have formed a bearish flag pattern
Technical factors also explain why the crypto market crash is occurring. As we wrote in our coverage of MSTR, Bitcoin has formed a giant bearish flag pattern on the daily chart. It also remains below the Supertrend indicator, pointing to further downside.
Ethereum price has also formed this pattern. The chart below shows it is attempting to move below the lower boundary of the flag, which could push it to the November low of $2,622. The crypto market normally drops when Bitcoin and Ethereum are sending bearish signals.
Deleveraging continues as futures open interest drop
Meanwhile, futures data shows that investors have continued to reduce their leverage in the crypto market.
Data compiled by CoinGlass show that futures open interest has been in free fall over the past few months. It dropped by 3.55% on Monday to $129 billion, down from the year-to-date high of over $255 billion. Crypto prices often decline when leverage in the industry declines.
