if( length() > 0 ; ;Why did crypto flash crash today as liquidations jumped? (Aug. 25) )

Crypto Flash Crash Triggered by Surging Liquidations

A crypto flash crash resumed on August 25, erasing some gains from the weekend rally that followed Jerome Powell’s dovish statement at the Jackson Hole Symposium. Bitcoin (BTC) price fell to $111,400 from a weekend high of $117,000, while Ethereum (ETH) dropped to $4,640 after nearing the $5,000 resistance level. The total market capitalization of all cryptocurrencies declined by 2.9% to $3.86 trillion, down from a year-to-date high exceeding $4.1 trillion.

Liquidations surged by 390% to $845 million, resulting in the liquidation of 166,000 traders, according to CoinGlass data. Ethereum bulls faced the highest liquidations at $304 million, followed by Bitcoin at over $272 million. Other major assets affected included Dogecoin (DOGE), Solana (SOL), and Chainlink (LINK). Liquidations occur when exchanges close leveraged positions to prevent further losses, often exacerbating selling pressure.

Derivatives market data showed futures open interest increasing by 11.74% to over $1 trillion, with the weighted funding rate rising by 17%, indicating a long squeeze. Profit-taking after the recent rally also contributed to the flash crash.

Potential Dead Cat Bounce

The recent market surge may have been a dead cat bounce, characterized by a brief rally followed by a resumption of the downtrend. Technical analysis supports this thesis, with Bitcoin forming bearish patterns on the weekly chart. A rising wedge pattern has emerged, connecting highs since March and lows since August of the previous year, increasing the likelihood of a bearish breakout.

Bitcoin also exhibited a double-top pattern around $123,500 and bearish divergence in indicators like the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD), which declined despite the rally. These factors suggest the flash crash could signal a deeper correction rather than a temporary setback.

Supporting Arguments

• High liquidation volumes indicate excessive leverage and market fragility, leading to cascading sell-offs.
• Bearish technical patterns, such as the rising wedge and double-top, historically precede significant price declines.
• Divergence in momentum indicators points to weakening bullish sentiment, reinforcing the dead cat bounce hypothesis.

This analysis is based on available data and should not be considered financial advice. Investors should conduct their own research and consider risk factors.