Bitcoin drops 8%, US markets shed $2T in value — Should traders expect an oversold bounce?

Crypto and stock markets took heavy losses throughout the US trading session. Should traders expect a relief rally due to oversold conditions?

Bitcoin (BTC) and US stock markets all sold off sharply after US President Donald Trump shook up financial markets by announcing a list of reciprocal tariffs on several countries.

On April 3, the S&P 500 saw a 4.2% drop at market open, its most significant single-day decline since June 2020. The Dow Jones Industrial Average fell 3.41%, to 40,785.41 from 42,225.32, while the Nasdaq Composite dropped 5.23%. Overall, $1.6 trillion in value was wiped out from US stock at the market open.

Bitcoin’s value dropped by 8%, but a positive is bulls seem capable of defending the $80,000 support level. These steep declines essentially stem from uncertainty surrounding the new tariffs and amplify investors’ concerns about impending recession.

Data from Tradingview suggests that the total crypto market has dropped 6.8% over the past 24 hours and it seems unlikely that a relief rally is viable in the short-term.

Crypto liquidations soar to $573M

According to CoinGlass, in the past 24 hours, more than 200,000 traders were liquidated, with the total amount exceeding $573.4 million. The largest liquidation occurred on Binance, with an ETH/USDT position worth $11.97 million being force closed.

Meanwhile, Bitcoin’s open interest dropped below $50 billion, reducing market leverage. Joao Wedson, CEO of Alphractal, mentioned that the liquidation heatmaps indicate heavy leverage around $80,000, raising the potential for a potential drop to $64K–$65K if Bitcoin breaks this level with high trading volume.

Cre: Cointelegraph