Bitcoin has fallen sharply to around $108,700, marking its lowest level in nearly a month. After weeks of holding above key support zones, the market is now showing clear signs of fatigue. The decline comes amid a mix of profit-taking, slowing ETF inflows, and rising liquidation pressures — all of which suggest the current rally may be running out of steam.

For the past few sessions, Bitcoin has struggled to reclaim the $112,000 mark, and with sellers dominating, technical analysts now view this breakdown as an early warning of trend exhaustion.

1. Profit-Taking by Long-Term Holders

On-chain data indicates that long-term holders — those who have held Bitcoin for more than six months — are starting to take profits after months of accumulation. This kind of behavior typically coincides with late-cycle patterns in Bitcoin’s history, when prices begin to flatten out following strong rallies.

The realized profit-to-loss ratio, which measures how much profit or loss holders are booking, has surged to one of its highest levels in the last 12 months. When this metric rises excessively, it often reflects a market that’s overextended and ripe for correction.

Many of these long-term investors accumulated BTC at much lower levels earlier in the year. As prices surged beyond $110K, some began offloading their positions, locking in significant gains. This natural profit-taking phase has historically triggered short-term corrections before a new accumulation wave begins.

2. Weakening Institutional Demand and ETF Flows

One of the defining features of this year’s bull phase has been institutional participation through spot Bitcoin ETFs. However, recent data shows a noticeable slowdown in ETF inflows — with several consecutive sessions of muted or even negative flows.

This cooling demand suggests that institutions, which had been steady buyers during earlier rallies, are now adopting a wait-and-see approach. When ETF demand flattens, it reduces the steady absorption of newly available Bitcoin supply, creating temporary price headwinds.

Analysts also note that some institutional funds may be rebalancing portfolios after large unrealized profits, further adding to the selling pressure.

3. Liquidations and the Leverage Reset

The fall below $110K triggered a chain reaction across derivatives markets. More than a billion dollars in leveraged long positions were liquidated in less than 24 hours, signaling how overheated the market had become.

Liquidations like these often create cascading effects. As one set of traders are forced to sell, it pushes prices lower, triggering further margin calls and panic exits. The result is a rapid, self-reinforcing decline that can wipe out weeks of steady gains in a matter of hours.

The leverage ratio across major exchanges has now dropped significantly, indicating that many speculative positions have been flushed out. Historically, these “leverage resets” have been painful in the short term but healthy for the long-term structure of the market.

4. Technical Weakness and Macro Pressure

From a technical standpoint, Bitcoin’s break below $112K invalidated an important support level that had held for several weeks. Momentum indicators such as the Relative Strength Index (RSI) have rolled over from overbought territory, and moving averages are beginning to converge, reflecting a slowdown in upward momentum.

Traders are now watching the next major support zone around $107,500–$106,000. If Bitcoin fails to hold that range, it could trigger another wave of algorithmic selling and short-term bearish sentiment.

The broader macro environment is also playing its part. With upcoming U.S. inflation data and central bank statements expected soon, risk assets — including cryptocurrencies — are under pressure. Rising yields and a stronger dollar have historically created headwinds for Bitcoin, as investors rotate into safer assets during uncertain macro cycles.

5. Market Psychology — From Euphoria to Exhaustion

After months of relentless optimism, the sentiment in the crypto market is showing signs of fatigue. Social data reveals declining mentions of Bitcoin across major trading forums, and retail search trends have plateaued.

This psychological exhaustion often follows extended rallies when traders expect continued gains but the market fails to deliver. As enthusiasm fades, price action tends to move sideways or down until a fresh narrative or catalyst revives interest.

However, not all investors see this as negative. Some long-term participants view the current phase as a natural cooldown — a pause that helps reset the market before the next leg upward.

6. Scenarios Ahead: What to Watch Next

Bearish Scenario

If Bitcoin fails to maintain support above $108,000, the next likely test could be around $106,000. Below that, a drop toward $103,000 would not be surprising, especially if ETF outflows persist or macroeconomic data disappoints.
In this scenario, altcoins could suffer disproportionately, as capital typically exits riskier assets faster during downturns.

Stabilization Scenario

If Bitcoin consolidates around the $108K–$110K range and manages to attract renewed buying interest — especially from institutions or high-net-worth investors — the market could stabilize. A sustained rebound above $112,000 would signal renewed strength and could lead to a retest of the $118,000 zone in the coming weeks.

Bullish Recovery

In the more optimistic case, a sharp reversal backed by strong trading volumes could mark the end of the correction. For this to happen, ETF inflows would need to accelerate again, and macro indicators (such as inflation or interest-rate expectations) would have to turn favorable for risk assets.

7. The Bigger Picture

Despite the recent correction, the long-term fundamentals behind Bitcoin remain intact. The network’s hash rate continues to rise, miner profitability remains stable, and global adoption metrics — including wallet creation and institutional participation — show steady growth.

Corrections like these are not unusual in Bitcoin’s cycle. Historically, every major bull market has been punctuated by several 15–25% retracements, each of which acted as a reset point before prices marched higher.

Veteran traders often describe these phases as “shaking out the weak hands” — forcing out short-term speculators and giving patient investors a chance to reaccumulate at better levels.

8. Key Takeaways

• Bitcoin has dropped to around $108,700, its lowest level in a month, signaling short-term exhaustion after a strong rally.
• Profit-taking by long-term holders and slowing ETF inflows have reduced upward momentum.
• Over $1 billion in long positions were liquidated in 24 hours, highlighting an overheated derivatives market.
• Technical charts point to potential downside toward $107K–$106K if support fails, though strong buying near these zones could stabilize prices.
• Despite the correction, long-term fundamentals and institutional adoption remain robust, suggesting that this pullback may be a healthy consolidation phase rather than a trend reversal.

In summary: Bitcoin’s drop below $109K doesn’t necessarily mark the end of the bull market — but it’s a clear reminder that even in an optimistic cycle, the market needs to pause, cool off, and reset. As traders look for direction, the next few weeks will reveal whether this is merely a breather or the start of a deeper correction.