The crypto market is holding near $2.66 trillion as short squeezes and Treasury buyback optimism support prices. However, key resistance and rising long liquidations could determine what happens next.
XMR$551.86-0.68%The total crypto market capitalization has tested the $2.68 trillion area three times since August 22 without managing a decisive breakout.
This level represents an important resistance zone. A sustained daily close above $2.68 trillion could strengthen the bullish structure and open the door toward the next upside levels near $2.75 trillion and $2.88 trillion.
At the same time, the downside risk remains clear.
The $2.54 trillion level is currently acting as an important support floor. If the market loses this area, the developing double-top pattern could point to a move toward $2.40 trillion, potentially erasing a significant portion of the August recovery.
This leaves the broader crypto market at an interesting point: bulls need a convincing breakout, while bears are watching for signs that the rally is losing momentum.
Related: Crypto market gaining $400 billion and whether the bull run has started
A major part of the recent rally has come from the liquidation of bearish positions.
According to CoinGlass data cited in the source material, approximately $458 million in short positions were liquidated over the past 24 hours. When traders betting against the market are forced to close their positions, they often have to buy back assets, creating additional upward pressure.
However, the market is no longer moving in only one direction.
Long liquidations have also reached around $228 million, showing that leveraged traders on both sides of the market are now facing increased volatility. This could make the next major move less predictable than the initial short-driven rally.
The broader market rally has already produced some major moves in recent days, including Bitcoin's sharp recovery.
Related: Bitcoin's biggest three-year jump as BTC moved toward $80,000
The macro environment has also helped support crypto prices.
The U.S. Treasury recently announced plans to increase bond buybacks to $4 billion, doubling the previous limit. The move has fueled speculation about improving liquidity conditions and helped strengthen appetite for risk assets.
As highlighted in the following post, the market has been closely watching the potential impact of Treasury policy on broader financial conditions:
Improved liquidity expectations have been one of the major narratives behind the recent crypto rally, alongside large-scale short liquidations.
Related: Why crypto prices surged as Treasury buybacks boosted risk appetite
Another sign of growing bullish positioning is the increasing demand for call options connected to BlackRock's spot Bitcoin ETF, IBIT.
The growing call demand suggests that some market participants are positioning for further upside, even as the broader market approaches a significant resistance zone.
While Bitcoin and the broader crypto market remain the main focus, Monero (XMR) has also shown notable strength.
XMR is up around 5.7% on the day and 21% over the past 30 days, according to the data provided. The token has continued trading inside a rising channel that has remained intact since June 7.
However, the price has struggled around the $444 area, while buying volume has declined since August 22.
A breakout above $463 could open the door toward $494 and potentially $544. On the downside, failure to regain $444 could leave $413 as the next important support level.
The crypto market remains supported by the momentum created through short liquidations and improving liquidity expectations. However, the growing number of long liquidations and declining buying volume suggest that the market is entering a more sensitive phase.
For now, the $2.67 trillion resistance and $2.54 trillion support are the key levels to watch.
A breakout above resistance could extend the August recovery. But if the market loses its support floor, the double-top structure could trigger a deeper pullback.
The next few sessions may therefore determine whether the crypto market has enough momentum to continue higher or whether traders begin taking profits after one of the strongest rallies of the month.
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AAVEThe US Treasury Has Now: 1. Announced that Treasury buybacks would double from $2 billion to $4 billion 2. Announced that Treasury buybacks could "more than double" 3. Considered using its $950 billion General Account for these purchases Meanwhile, the 10Y Note Yield is Show more
