Leading cryptocurrencies plunged Thursday, diverging with the strong stock market rally.

What Happened: Bitcoin rallied close to $60,000 on healthy macroeconomic data during trading hours, before taking a sharp U-turn to dip below $57,000 – its lowest in a week.

Ethereum followed a similar trajectory, dropping as low as $2,530 after facing resistance at $2,670.

The southward movement triggered total liquidations of $221 million in the last 24 hours, with more than $173 million in upside bets getting wiped out.

Bitcoin's Open Interest fell less significantly than the price drop, signaling the entry of new short sellers.

The Cryptocurrency Fear & Greed Index still flashed "Fear" as of this writing, reflecting strong selling pressure in the market.

Top Gainers (24-Hours)

The global cryptocurrency market stood at $2.03 trillion, shrinking 1.71% in the last 24 hours.

The stock market ended on a high Thursday. The Dow Jones Industrial Average rallied 554.67 points, or 1.39%, to end at 40,563.06. The broad-based index S&P 500 rose 1.61% to close at 5,543.22. The tech-focused Nasdaq Composite surged 2.34% to end at 17,594.50.

The rally followed encouraging macroeconomic numbers, as retail sales rose in July, while weekly jobless claims fell for the week ending Aug. 9. The healthy numbers served to allay recession fears sparked by a report released on July 2.

Analyst Notes: Prominent cryptocurrency trader Poseidon pointed out how the Open Interest has "significantly" increased despite Bitcoin's sideways or corrective action. This indicated aggressive short selling.

"I will be looking for long entries if the price dips into the demand zone, with a clear invalidation below $54,000. My target is the previous highs above $63,000," the trader revealed their strategy.

$BTC
Price has returned to the daily demand level, where we can expect buyers to step in. However, the price remains below the daily 21 EMA, indicating that any long trades should be considered short-term since we are still in a daily downtrend. Holding this demand zone is... pic.twitter.com/yQEsjajzeA

— Poseidon (@CryptoPoseidonn) August 15, 2024

Another widely followed analyst, Ali Martinez, had predicted Ethereum's correction to $2,350 after spotting a rising wedge pattern. With the cryptocurrency dipping below $2,600, the possibility of further retracement still loomed.

— Ali (@ali_charts) August 15, 2024