SPX Plummets 10% in 24 Hours as Liquidity Crunch Hits – Will Bulls Stage a Comeback?

Markets reel as the SPX nosedives amid a brutal liquidity squeeze. Can the bulls claw their way back—or is this the start of something uglier?

Blood in the water. The SPX just got gut-punched with a 10% freefall in a single day—liquidity vanished faster than a crypto bro's profits in a bear market. Now traders are scrambling: Is this a buying opportunity or the first domino to fall?

Bulls vs. bears. The usual dip-buyers are licking their chops, but with margin calls flying and order books thinning, this rebound won't come easy. Remember: Wall Street's 'buy the dip' mantra works until it doesn't.

Watch the Fed. Every crash lately gets a central bank band-aid—but with inflation still lurking, will Powell play hero or hang traders out to dry? Either way, buckle up. When volatility spikes this hard, someone's about to get rich (and someone's getting wrecked).

SPX bulls fight back as price hits key demand zone

Analysis of the SPX 4-hour chart showed that the asset had traded into a Fair Value Gap (FVG) demand zone. This refers to price levels where unfilled buy orders lie, typically acting as a catalyst for a potential rebound.

In this case, a rebound could lead SPX back to a high of $1.36, representing a 17.93% jump.

Source: TradingView

However, if the FVG demand fails, SPX could drop to a lower demand level between $1.056 and $1.025.

This lower demand level previously triggered a push to the most recent high of over $1.4. A similar MOVE might be replicated if SPX returns to this zone.

Liquidity crunch deepens bearish pressure

AMBCrypto analyzed other market indicators to assess whether the current FVG demand zone is likely to hold.

To do this, two key technical indicators were considered: the Chaikin Money FLOW (CMF) and the Money Flow Index (MFI).

The CMF tracks whether buying or selling volume dominates the market, based on its position above or below 0. At the time of writing, the CMF read at -0.10, indicating that sellers were currently dominating.

Source: TradingView

This trend has led to a significant drop in market liquidity, as also shown by the MFI. The MFI tracks liquidity inflow (above 50) or outflow (below 50) for an asset.

The MFI was 42.6 at press time, implying increased outflows and placing SPX at a critical point. With selling volume rising and liquidity exiting the market, the FVG level on the chart is less likely to hold.

Despite crash, SPX still dominates

A broader market outlook shows that SPX remains one of the top-performing assets.

CoinMarketCap’s 90-days Performance Index for cryptocurrencies shows that SPX has gained 131% during this period—making it the best-performing memecoin in the market.

Source: CoinMarketCap

This trend suggests continued strong interest in SPX and a significant potential for a rebound.

A medium-term outlook based on Community Sentiment also reflects this interest, with 82% of investors voting to remain bullish on the asset despite the recent decline.

Overall, while SPX may be on the verge of another drop, the bulls are not backing down just yet.