Key takeaways:
Bitcoin fell 4% to $112,000 amid a market-wide correction, resulting in $1.6 billion in long liquidations.
Analysts suggest the BTC bull market may have peaked, indicated by various bearish on-chain signals.
Bitcoin sellers continued their activities into the weekly open on Monday, with the price dropping to $112,000, which triggered significant liquidations of leveraged positions across the crypto markets.
Experts are indicating signs of “cycle exhaustion” in Bitcoin, suggesting further declines may be imminent.
Bitcoin Eliminates Liquidity in Drop to $112,000
The price of Bitcoin (BTC) dipped to $111,980 on Monday, reflecting a 4% decrease within 24 hours, amid a broader market decline, according to Cointelegraph Markets Pro and TradingView.
This marked a 10% deviation from the all-time high of $124,500 reached on August 14, accompanied by substantial liquidations in the derivatives market.
Related: Largest long liquidation of the year: 5 important things about Bitcoin this week
More than $1.62 billion in long positions were liquidated, with Ether (ETH) responsible for $479.6 million and Bitcoin for $277.5 million.
In total, $1.7 billion was erased from the market across short and long positions, as illustrated in the figure below.
This abrupt market downturn led to the liquidation of 402,730 traders, surprising many as investor sentiment shifted to bearish.
The Bitcoin liquidation heatmap revealed the price absorbing liquidity around $112,000, with over $400 million in bid orders between $111,500 and $110,000.
This indicates that Bitcoin’s price may continue to decline to clear this liquidity before any potential recovery.
Is the Bitcoin Bull Cycle Losing Momentum?
The recent interest rate cut by the Fed, previously regarded as a significant bullish catalyst for BTC, failed to elevate markets, suggesting the Bitcoin bull cycle might be nearing its end.
“Bitcoin is already displaying signs of cycle exhaustion and many are overlooking it,” stated Alphractal founder Joao Wedson in a post on X on Monday.
Various on-chain signals now alert that Bitcoin’s rally may have lost steam.
Bitcoin’s Spent Output Profit Ratio (SOPR), which gauges the overall profitability of transactions on the blockchain, has shown decreasing profitability, heightening the odds of a more substantial correction.
The Sharpe ratio is lower than it was in 2024, signaling decreased risk vs return and profit potential.
“This won’t draw in as many institutions as many anticipate,” remarked Wedson, adding:
“Even if BTC reaches new all-time highs, profitability will remain low, and the real interest will likely shift to altcoins.”
Bitcoin’s taker buy/sell ratio across exchanges, which measures market sentiment, recorded -0.79, according to CryptoQuant data.
When this ratio dips below 1, it indicates that bears dominate the market; above 1 signals bull control.
The current -0.79 ratio suggests that selling volume now surpasses buying volume, indicating negative trader sentiment.
The last time similar figures were observed was on January 20, when Bitcoin reached around $109,000 before entering a three-month correction that saw its price drop by 32% to $74,000 in April.
The taker buy/sell ratio supports that the market is in a precarious situation, as escalating selling pressure exposes vulnerabilities in Bitcoin’s price structure.
As reported by Cointelegraph, analysts are now divided on the likelihood of a rally in October following Monday’s bearish market shift.
This article does not provide investment advice or recommendations. Every investment and trading action carries risk, and readers are encouraged to conduct their own research before making decisions.
