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Bitcoin crumbled under pressure as bulls were forced to retest the $112,000 support, with Fed rate cut euphoria fading and a cascade of liquidations throwing the crypto market into panic.
The total cryptocurrency market cap lost a significant chunk of value, slipping below the $4 trillion mark after dropping over 3% in the past 24 hours.
Market sentiment also tilted toward risk aversion, with the Crypto Fear and Greed Index dipping deep into the “Fear” zone, down 4 points from the previous day.
Altcoins ranked among the top 100 cryptocurrencies gave up almost all of the past week’s gains, with most showing losses on the day.
Why is the Bitcoin price going down?
Bitcoin visited intraday lows of $112,293 today after starting the day above $115,674, as the market endured one of the most aggressive liquidation events of the cycle.
Within just the first hour of trading, over $1 billion in long positions were wiped out, part of a broader $1.71 billion in total liquidations recorded in the last 24 hours, according to data from CoinGlass.
A large portion of this carnage unfolded in a tight window earlier today, with nearly $1.11 billion in long positions erased over just 12 hours.
The pain was unevenly distributed: longs accounted for the lion’s share, while shorts saw comparatively limited damage.
This imbalance suggests that many traders were overexposed on the bullish side, possibly expecting the Fed’s recent rate cut to extend the rally.
Longs took the brunt of the hit in what looked like a crowded trade gone wrong, likely fueled by misplaced confidence that the Fed’s rate cut would breathe new life into the rally, only for the market to pull the rug just as traders piled in.
The initial bump following the Fed’s 25 basis point cut last week was short-lived.
Investors had hoped for a clear pivot toward sustained easing, but Fed Chair Jerome Powell’s cautious tone poured cold water on those expectations.
His insistence that future cuts would be “data dependent” left the market without a clear roadmap. In turn, risk appetite took a hit.
What made matters worse was the synchronised tightening by Gulf central banks shortly after the Fed move, which signalled that other regions remain wary of inflation risks.
This broader macro backdrop has complicated the narrative for crypto bulls, who now face rising yields on traditional assets, making alternatives like Bitcoin less attractive in the near term.
As fear spread across the market, over 400,000 traders were liquidated in the past day alone.
Leading the liquidations tally was Bybit, with $712 million in wiped-out positions, a stark reminder of how quickly over-leveraged bets can unravel during volatile sessions.
The Relative Strength Index (RSI) also dropped into oversold territory during the flush, briefly falling below 20.
This indicates that much of the selloff was not driven by a steady stream of organic selling, but rather by forced exits as margin calls kicked in across major exchanges.
For now, all eyes turn to upcoming comments from over 10 Fed officials, including Powell again, as well as Friday’s PCE price index data.
Both are likely to influence whether the market regains its footing or braces for another leg down.
Will Bitcoin price crash?
The Fed’s interest rate cut last week, once seen as a key bullish trigger, now appears to have done little more than fuel misplaced optimism.
The rally that briefly followed has since collapsed under the weight of forced liquidations, exposing what many traders now see as cracks in Bitcoin’s recent strength.
Some in the community are already calling this the start of a cycle top, with Joao Wedson of Alphractal noting that Bitcoin is showing “signs of cycle exhaustion,” a sentiment echoed in several on-chain metrics.
One of the key warning signs has been Bitcoin’s Spent Output Profit Ratio (SOPR), which tracks whether coins moved on-chain are in profit or loss.
The fading profitability reflected in the SOPR suggests that recent buyers may be capitulating or locking in losses, a typical hallmark of distribution phases.
That kind of shift has often marked the early stages of broader distribution in previous cycles.
The risk-adjusted returns simply aren’t what they used to be, and that’s a problem for institutions, which are more sensitive to that trade-off than retail.
Despite this, Bitcoin ETFs have continued to attract capital. Inflows into spot Bitcoin funds hit $3.9 billion over the last four weeks, according to SoSoValue, suggesting some big players are still willing to position long.
But the bullish narrative is undercut by a deteriorating taker buy/sell ratio, which currently sits at -0.79.
That means sell orders are consistently overpowering buy orders across exchanges, a bearish imbalance.
The last time this ratio looked this grim was in late January, when BTC topped around $109,000 before tumbling more than 30% in the months that followed.
Adding to the unease is the liquidation heatmap itself, which paints a telling picture of the damage.
After slicing through heavy liquidation clusters between $116,000 and $113,000, the price dropped into a thinly defended zone just above $112,000.
The heatmap shows a clear band of price compression around that level, but with limited support below.
If Bitcoin loses its grip here, the next liquidation-heavy zones sit near $110,000 and then around $108,500, areas where forced selling could once again accelerate the drop.
On the upside, the path back to stability begins with reclaiming the $113,000 to $114,000 range, which now acts as the nearest resistance zone after serving as the floor for heavy liquidation clusters earlier in the day
This region saw the sharpest unwinding of long positions during the plunge, and any move back above it would likely test the resolve of short sellers who entered late.
A sustained recovery above $114,000 would also help fill the liquidity vacuum created during the initial flush, offering room for the price to reestablish footing and retest the lower end of the $116,000 range.
The $116,000 mark, however, carries more weight. That level held as support in the hours leading up to the collapse and formed the base of several liquidation bands on the heatmap.
Reclaiming it wouldn’t just signal technical recovery; it would also mean that the market has absorbed the bulk of the leverage wipeout and is willing to reprice risk.
Analyst sentiment was also tilted towards a steeper correction from current levels, which could be persistent over the next two weeks, according to crypto market veteran Michael van de Poppe. See below.
This is the type of chart that I think should be taking the low before we reverse back upwards for $BTC. Perhaps we’ll have 1-2 weeks of correction.
Echoing a similar caution, Ted Pillows, a crypto analyst, added that the flagship cryptocurrency needs to reclaim $113,500, otherwise a correction towards $106,000 may be on the table.
BTC/USDT 1-day price chart. Source: Ted Pillows on X.At press time, Bitcoin was trading at $112,875, down over 2.4% in the past 24 hours.
Altcoin market
The total altcoin market cap slipped more than 2.2% in the past 24 hours to around $1.75 trillion at press time, as major tokens extended their losses.
Ethereum, the largest altcoin by market value, dropped over 7% on the day, while other heavyweights like Solana (SOL) and Dogecoin (DOGE) fell even harder, shedding between 8% and 10%.
The selloff came as the Altcoin Season Index slid 7 points to 62, signalling that optimism around a sustained altcoin season is beginning to fade.
Among the few bright spots, the day’s top gainers managed only modest advances, with Mantle (MNT), OG (OG), and MemeCore (M) posting single-digit gains of 2% to 6%—likely a brief relief bounce following the sharp declines across the board.
Source: CoinMarketCap.The post Crypto crash deepens: BTC risks fall toward $106K as $1B in longs wiped out appeared first on Invezz
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