Bitcoin (BTC), the world’s largest cryptocurrency, suffered a significant price reversal, marking its most substantial single-day percentage decline since August 14, when it reached a new all-time high of $124,500. The premier cryptocurrency opened at $113,300 on Thursday but corrected over 3% to a low of $108,630 before bouncing to its current market price of $109,605.
The turbulence in Bitcoin swiftly rippled across the broader crypto ecosystem. Major altcoins, including Ethereum (ETH), Solana (SOL), and Dogecoin (DOGE), also saw significant losses, demonstrating the high correlation across the market during periods of extreme volatility.
Ethereum, in particular, dropped below the key $4,000 psychological level, intensifying the bearish sentiment. Ether has declined by over 5% in the past 24 hours, currently trading at $3,923.
Massive Market Liquidation Trails Uncertainty
The sharp drop triggered a cascading effect across the derivatives market. Overleveraged traders, primarily betting on higher prices (long positions), were forced to sell, amplifying the downward momentum and resulting in multi-billion-dollar liquidations. This “leverage flush” is a common occurrence during sharp corrections, effectively “resetting” market euphoria.
Meanwhile, several factors contributed to this correction, which wiped out billions from the global cryptocurrency market in a single day. Some of the key drivers include concerns about U.S. interest rates and inflation.
Despite some dovish commentary from the Federal Reserve, lingering concerns over persistent inflation and the potential for a prolonged period of higher interest rates continue to spook investors, leading to capital flight from speculative assets.
What’s Next for Bitcoin?
Bitcoin has broken below several short-term support levels, suggesting that the immediate momentum has flipped bearish. Critical support zones to watch are around the $108,000 to $104,000 levels, which coincide with major moving averages and previous consolidation ranges. If these levels fail to hold, a deeper correction toward the psychological $100,000 mark or lower could be on the cards.
Conversely, a quick rebound that reclaims the $115,000 level would signal renewed buying strength. Reclaiming the level would pave the way for much higher prices, including a possible rally to a new all-time high.
Despite the price action, some on-chain data remains robust. Institutional inflows into Bitcoin Spot Exchange-Traded Funds (ETFs) have shown resilience on certain days, suggesting that long-term investors are using the dip as a buying opportunity.
Furthermore, the overall trend of Bitcoin being moved off exchanges and into long-term cold storage wallets suggests conviction among ‘HODLers’ remains intact.
Many analysts view this correction as a necessary cooling-off period following an explosive rally in recent months. While the short-term is characterized by caution and potential for further volatility driven by macro news, the consensus on the long-term trajectory remains bullish.
Supporting this narrative is continued mainstream adoption facilitated by spot ETFs and Bitcoin treasury firms. Recall that several industry figures expect Bitcoin to rally to $200,000 or $250,000 by the end of the year.
Evans Kelvin
