Bitcoin's $111K Plunge: Did Liquidations Kill the Bull Run?

Executive Summary

Bitcoin (BTC) experienced a significant price correction, falling below $112,000 and reversing recent gains, marking an 11% drop from its Aug. 14 all-time high.

The downturn triggered over $642.4 million in leveraged long position liquidations, with Bitcoin accounting for $235.5 million of that total.

Analysts are closely watching key support levels around $111,800 to prevent deeper corrections, while some maintain optimistic long-term price targets for Bitcoin despite current volatility.

The Story So Far

The recent Bitcoin price correction and subsequent widespread liquidations of leveraged long positions were largely a reversal of a rally previously fueled by a dovish speech from Fed Chair Jerome Powell, specifically triggered when a major seller entered the market, exposing the inherent volatility and risk associated with highly leveraged positions in the cryptocurrency market.

Why This Matters

The recent Bitcoin price correction and widespread liquidations highlight the significant volatility and inherent risks within the cryptocurrency market, pushing Bitcoin to a critical juncture where key support levels are being tested. This event could lead to further short-term price drops to sweep liquidity, yet it also presents a divergent outlook among analysts, with some viewing the dip as a strategic entry point for a sustained long-term bullish trajectory.

Who Thinks What?

Analysts monitoring key support levels, such as Jelle and Captain Faibik, caution that Bitcoin’s inability to hold above thresholds like $111,900 or $111,800 could lead to deeper corrections towards $100,000 or the $107,000-$108,000 range.

Optimistic analysts and market participants, including Gert van Lagen, Michael van de Poppe, and BitQuant, maintain that Bitcoin’s parabolic trajectory remains intact, viewing the recent dip as a “great entry” opportunity and reiterating long-term price targets of $145,000 to $350,000.

Market data indicates that significant buy orders are accumulating in the $110,500-$109,700 range, suggesting that the price could potentially drop further to “sweep” this liquidity before a recovery.

Bitcoin (BTC) experienced a significant price correction on Monday, falling below $112,000 and triggering widespread liquidations of leveraged long positions across the cryptocurrency market. This downturn, which saw BTC drop to $111,000, reversed gains from a rally fueled by a dovish speech from Fed Chair Jerome Powell last Friday, as a major seller entered the market. The move pushed Bitcoin’s price 11% below its Aug. 14 all-time high of $124,500.

Market Liquidations Surge

The sharp decline resulted in over $642.4 million in leveraged long positions being liquidated, with Bitcoin accounting for $235.5 million of that total. Ether (ETH) followed, seeing $155 million in long liquidations. In total, approximately $806.95 million in both short and long positions were wiped out across the market.

Market data, including the Bitcoin liquidation heatmap, indicated significant buy orders accumulating in the $110,500-$109,700 range, with more bid orders extending down to $108,000. This suggests that the price could potentially drop further to “sweep” this liquidity before a potential recovery.

Analyst Perspectives on Price Trajectory

Crypto analysts are closely watching key support levels. Analyst Jelle noted that Bitcoin needed to hold above the monthly open at $111,900 to prevent a deeper correction towards $100,000. Similarly, Captain Faibik highlighted that the support around $111,800 was “getting weak,” and a breach could lead to a further drop into the $107,000 to $108,000 zone.

Despite the recent drawdown, several market participants maintain an optimistic outlook for Bitcoin’s future. Gert van Lagen stated that Bitcoin’s parabolic trajectory remains intact, targeting $350,000, although he cautioned that an invalidation of this structure could see prices fall to $95,000.

Michael van de Poppe, founder of MN Capital, viewed Bitcoin’s dip below $112,000 as a “great entry” opportunity for traders anticipating a larger upward move. Furthermore, analyst BitQuant reiterated last week that his cycle top target of $145,000 for Bitcoin in 2025 remains in play.

As Bitcoin navigates this period of volatility and significant liquidations, the market remains at a critical juncture, with both bearish short-term targets and bullish long-term predictions vying for dominance. Traders are closely monitoring support levels as the crypto asset seeks to find a new equilibrium.