By Chris Hollingworth 
The cryptocurrency market experienced a downturn on March 21, with the total market capitalization decreasing by 2.5% to around $2.75 trillion. Several factors contributed to this drop in prices.
One significant event was the wiping off of over $230 million from the crypto market within 24 hours after Bitcoin failed to sustain its recent rally to $87,000. Additionally, investors exhibited a risk-off attitude due to the ongoing correlation between US equities and crypto assets. A classic technical setup also indicated potential further declines for crypto investors.
Bitcoin led the market slump as traders took profits following its retracement from $87,000 after a speech by US President Donald Trump at the Digital Asset Summit in New York fell short of expectations. In the 90-second address, Trump expressed support for crypto but did not announce any new policies.
Ether (ETH) saw a decline for the second consecutive day, dropping below $2,000 on March 20, resulting in a 2% loss over the previous 24 hours. Other major cryptocurrencies like XRP (XRP), Solana (SOL), and Cardano (ADA) also experienced declines of 4%, 4.2%, and 3%, respectively.
The drawdown led to liquidation of $235 million in leveraged positions over the past 24 hours, with long positions accounting for $170 million of this total. The prevalence of long liquidations suggested an overleveraged bullish sentiment in the crypto market.
The ongoing correction in the crypto market mirrored weakness in US equities, with indices such as the S&P 500, Nasdaq composite, and Dow Jones all experiencing declines on March 20. This decline was attributed to a loss of investor confidence amid rising recession fears.
From a technical perspective, the combined market capitalization of all cryptocurrencies, known as TOTAL, displayed a bearish continuation pattern, indicating the potential for further downside movement. TOTAL was trading within a bear flag pattern, with a breakdown below key support levels possibly triggering another drop.
Analysts warned of the downside target for the bear flag pattern, estimating a potential decline to approximately $2.23 trillion, representing a 32% decrease from the current price levels. The market sentiment was cautious as investors navigated through the uncertainties in both the crypto and traditional financial markets.
