Bitcoin’s Sudden Fall Below $113K Alarms Investors
Bitcoin shocked traders after dropping under $113,000, erasing nearly $113 million in leveraged long positions. The decline came just days after Bitcoin touched a fresh all-time high of $124,176, raising questions about whether the current bull market is in jeopardy. Despite this sharp correction, many analysts point to the asset’s long history of volatility and argue that downturns are often followed by stronger rallies.
SEC Investigation and Corporate Turmoil Add Pressure
Market anxiety grew after reports surfaced that the U.S. Securities and Exchange Commission (SEC) was investigating Alt5 Sigma, a company tied to World Liberty Financial, which counts former President Donald Trump as a co-founder emeritus. The controversy surrounding potential fraud and manipulation in this partnership added to investor jitters.
On top of that, Wall Street felt fresh disappointment as new research showed that 95% of AI pilot programmes failed to deliver promised revenue growth. The news triggered a broader sell-off in tech stocks, feeding into Bitcoin’s decline.
Tariffs and Economic Concerns Weigh on Risk Assets
The U.S. government’s decision to impose 50% import duties on more than 400 aluminum- and steel-containing products rattled the markets further. With car parts, plastics, and speciality chemicals affected, economists warned of disruptions across supply chains and higher consumer costs.
As inflationary pressures rose, investor appetite for riskier assets like Bitcoin cooled. This environment pushed many traders to seek refuge in safer assets, such as gold, which UBS recently forecasted could climb as high as $3,700 by 2026.
Options Market Reflects Extreme Fear in Bitcoin
The Bitcoin derivatives market showed clear signs of panic. The 30-day delta skew for BTC options surged to 12%, its highest point in four months. Under normal conditions, this measure fluctuates between -6% and +6%. Anything above 10% is seen as extreme fear. Interestingly, the last time skew levels reached such heights was in April, when Bitcoin dropped below $74,500 before rallying 40% in just a few weeks. This historical precedent suggests that investor fear, while elevated, could set the stage for a rebound.
Comparing Past Bitcoin Corrections to Today’s Drop
Bitcoin is no stranger to steep pullbacks. In fact, the asset has endured several corrections of more than 20% during previous bull runs. Each time, however, the broader uptrend eventually reasserted itself, rewarding long-term holders. Analysts highlight that the current situation mirrors earlier episodes of panic, where excessive bearishness preceded a sharp recovery. While the timing of a bounce is uncertain, history shows that downturns often provide opportunities rather than signal the end of the cycle.
Could Bitcoin Benefit from Stock Market Outflows?
Some experts believe Bitcoin may ultimately stand to gain from weakness in traditional financial markets. As investors worry about corporate earnings, tariffs, and the U.S. fiscal deficit, capital could rotate into alternative assets. Bitcoin, with its fixed supply and growing mainstream adoption, continues to attract interest as a hedge against monetary instability. Even as derivatives markets flash fear, long-term fundamentals such as institutional adoption and global demand remain supportive of Bitcoin’s growth trajectory.
Bitcoin Volatility and a Bullish Long-Term Trend
Although Bitcoin’s crash below $113,000 has rattled short-term sentiment, most analysts agree the long-term bullish trend remains intact. Fearful investors may interpret $112,000 as a possible bottom, but others argue that volatility is simply part of Bitcoin’s DNA. In the broader context, adoption trends, supply limitations, and ongoing global economic uncertainty still point towards future gains. If history repeats, current turbulence may ultimately be remembered as another buying opportunity rather than the end of the rally.
Read More: Unlocking Bitcoin’s Full Potential A New Layer Two Solution Emerges