Bitcoin’s recent drop below $113,000 has shaken up the crypto markets, causing fears and a wave of leveraged position liquidations. With more uncertainty in the economy and regulations, the price drop of the top cryptocurrency raises questions: is $112,000 the lowest point, or could more trouble be on the way?
Regulatory and macroeconomic pressures
The sharp drop came after Bitcoin hit an all-time high of $124,176 just days before, which caused $113 million in leveraged long position liquidations. Analysts say that a number of things have made the market more volatile. US tariffs on more than 400 imported goods, including important everyday items, have made investors less confident and worried about possible problems in the supply chain and rising prices for consumers. UBS raised its gold price forecasts, which made people more worried about the economy. This was because people were still worried about the Federal Reserve’s direction and the US’s financial health.
There were also worries about rules and regulations. An SEC investigation into possible fraud and stock manipulation at Alt5 Sigma, a company that was part of a $1.5 billion partnership with World Liberty Financial, a platform linked to President Donald Trump, made headlines. The market feels even more uncertain now that people are questioning the honesty of the most well-known people in the industry.
Options Market Reflects Fear, But Bullish Potential Remains
Options for Bitcoin over the next 30 days Delta skew (put-call) jumped to 12%, its highest level in more than four months, showing that people are very scared. This high risk number is interesting, but in the past, big jumps like this have been followed by big recoveries. For instance, in April, a similar options skew spike happened at the same time as a drop in Bitcoin to $74,500. However, the market rose by more than 40% the next month.
Analysts say not to expect the end of Bitcoin’s long-term bull run, even though prices have gone down because of macroeconomic and sector-specific factors. Short-term fear can often go too far and ignore the basics of the market. Bitcoin may end up benefiting from capital inflows as traders look for other options in a weak stock market.
Even though the price has gone down recently, the overall bullish story about Bitcoin is still true. $112,000 is an important support level for investors to keep an eye on. Historical patterns show that big corrections can lead to big recoveries in the changing world of cryptocurrencies.
Read also: Bitcoin Slips as Markets Await Powell Speech