Cryptocurrencies failed to join Wall Street's best day since April on Monday, 9 November, as more than $1 billion in leveraged positions was liquidated and Bitcoin dipped to its lowest level since August before recovering.

Bitcoin touched an intraday low near $74,780 and closed the day at $75,248, up 0.7% on the day after trading in a $73,667 to $75,451 range. Ether ended at $2,132, up 0.4%, while Solana closed at $86.61, up 0.2%.

The modest closes disguised a violent session. Ether had fallen more than 7% at its worst point, and Bitcoin was down close to 6% during the most intense selling, before buyers returned later in the day.

Leveraged longs bore the losses

Data from Coinglass showed more than $1 billion in leveraged positions was liquidated during the episode, with long positions, bets that prices would rise, accounting for about 88.2% of the total.

The forced closures worked as a chain reaction. As prices fell, traders whose margins dropped below permitted limits had their contracts closed automatically by exchanges, adding supply to the market and deepening the fall.

Outflows from spot Bitcoin exchange-traded funds added to the pressure, removing a source of buying support during the key hours of the decline, according to market reports.

Equities raced ahead without crypto

The contrast with shares could hardly have been sharper. The Dow Jones Industrial Average jumped 1,104 points, or 2.15%, the S&P 500 rose 2.35% in its best session since April, and the Nasdaq Composite climbed 2.74%, as falling oil prices eased inflation fears.

Crypto's failure to follow equities higher underlined how the two markets have parted company in recent weeks. Bitcoin has now spent a week below its 50-week moving average, and Ether closed on Sunday below its 200-day moving average for the first time since 18 August.

Sentiment in crypto remains fearful. The Fear and Greed Index stood at 32, in fear territory, and only five of the 100 largest cryptocurrencies by market value gained at least 1% over 24 hours during Monday's sell-off.

Inflation data is the next test

Traders now look to Tuesday's October consumer price index, due at 8:30am Eastern Time, which will shape expectations for the Federal Reserve's December meeting. Economists expect headline prices to have risen 0.3% month on month and core prices 0.2%.

For Bitcoin, the immediate technical test is to hold $75,000 and reclaim $76,000 before a sustained rebound becomes likely, according to market analysis. Ether needs to recover $2,200, a level it lost during the sell-off.

Bitcoin's one-week implied volatility, the price swings options traders expect, has jumped to about 43% from about 33% last Thursday, while Ether's has risen to about 60% from about 46%, a sign that traders expect further sharp moves.

Until crypto finds its own catalyst, it looks set to keep lagging a stock market that has rediscovered its appetite for risk.