Key Highlights
Bitcoin dropped below the $112K mark, resulting in $600 million in losses and $475 million in liquidations. Traders are now closely monitoring the $110K level as a crucial defense against further downside.
On August 24th, Bitcoin [BTC] breached the $112K support level. This wasn’t just a regular dip but triggered a significant risk-off sentiment in the market.
The subsequent day saw nearly $600 million in Realized Losses flooding the market, marking the largest sell-off of the month.
This was followed by a Long Liquidation sweep of $475 million, the deepest cleansing of leveraged long positions since the April FUD caused by tariffs.
In essence, a breach of one support level led to a sharp sell-off, with $110K now being a critical line of defense on the chart.
The Vulnerable Market Structure of Bitcoin Exposed!
A glance at Bitcoin’s chart reveals the significance of the $112K level.
After hitting a peak of $123K on August 2nd, BTC retraced to retest the $112K support. Subsequently, it surged by 10.7% in two weeks to achieve a new all-time high.
However, the failure to replicate a similar rebound on the next retest flipped the market structure bearish. This was confirmed by $600 million in Realized Losses as HODLers with higher cost basis rushed to sell off their holdings.
Source: TradingView (BTC/USDT)
As a result, Bitcoin recorded three consecutive sessions of lower lows.
The first dip touched $110,305, the second $110,185, and the third extended down to $108,761. This put short-term support under pressure, with bears eyeing liquidity zones just below $110K.
In simple terms, BTC is holding onto $110K as its primary short-term defense. If this level breaks, it could pave the way for a deeper pullback towards the $107K-$105K range, where stronger buying interest is anticipated.
Bitcoin Faces the Risk of Sliding to $100K without a Macro Boost
The Crypto Volatility Index (CVI) registered 47.69 at the current moment, indicating moderate market volatility.
Despite the breakdown, there was no widespread panic. The Fear & Greed Index remained neutral at 47, up by four points from the previous day.
Spot ETFs also turned positive, suggesting a gradual return of buying support. Moreover, Open Interest (OI) remained subdued, indicating that leverage hasn’t surged back into the market.
These factors have kept Bitcoin structurally bearish, although any uptick could swiftly shift the sentiment.
Flows Favor Ethereum Over Bitcoin
Source: X (Willy Woo)
However, a significant challenge for Bitcoin comes from the ETH/BTC ratio.
Inflows into Ethereum [ETH], amounting to approximately $0.9B daily (represented by silver), are catching up to Bitcoin’s inflows (represented by orange).
Furthermore, while BTC ETFs have turned positive, ETH ETFs have attracted over $1 billion in the last four transactions, indicating a substantial shift of capital towards Ethereum.
Therefore, unless a macro catalyst like a change in Fed policy occurs, whales are likely to continue directing risk-off flows towards Ethereum, leaving Bitcoin vulnerable to a deeper decline towards the $100K level.
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