Bitcoin's price experienced a significant downturn during Monday's Asian trading session, falling below the $111,500 mark. This move tested a critical daily support area and resulted in the liquidation of hundreds of millions in leveraged futures positions. Despite the decline, on-chain data indicates that spot market demand remains robust, creating a complex picture for traders and investors.
Key Takeaways
- Bitcoin's price fell below $111,500, entering a key demand zone between $110,700 and $113,200.
- The drop led to the liquidation of approximately $280 million in long futures positions, removing excess leverage from the market.
- Despite the price decline, on-chain metrics show strong and consistent spot buying, particularly from U.S. investors.
- Analysts are closely watching support levels at $110,700, $107,200, and the psychological barrier of $100,000 to determine the next trend.
Price Correction and Liquidity Events
Bitcoin's value dropped sharply, breaching several short-term price floors to test a significant area of buyer interest. The price action cleared out liquidity that had built up between $114,000 and $115,000. This downward move puts Bitcoin at risk of closing its daily candle below its 50-day exponential moving average (EMA), a technical indicator often used to gauge medium-term trend direction. A close below this level, situated around $113,200, could signal further weakness to technical analysts.
The recent correction follows a brief rally last week, which was prompted by the Federal Reserve's interest rate decision. Bitcoin's price rose to $117,500 but failed to establish a new bullish market structure, ultimately leading to the subsequent decline.
Leverage Flush Clears Market
The price drop triggered a substantial deleveraging event in the derivatives market. Approximately $280 million in long futures positions were liquidated, according to market data. This process, often called a "leverage flush," removes speculative positions that were betting on continued price increases. Such events can reset market sentiment and create a healthier foundation for the next price move, as it reduces the influence of overly optimistic leveraged traders.
On-Chain Data Reveals Strong Underlying Demand
While the futures market showed signs of weakness, the underlying spot market tells a different story. Data from analytics firm CryptoQuant revealed a strongly positive Coinbase Premium Index. This metric indicates that buyers on the U.S.-based Coinbase exchange were paying a premium, suggesting high demand from American spot investors. This strong buying pressure may be acting as a buffer, preventing a more severe price collapse.
This observation is supported by further on-chain analysis. Bitcoin researcher Axel Adler Jr. pointed out that spot demand has been consistent over the past month. His data shows an apparent accumulation of 95,800 BTC by spot buyers. This sustained purchasing activity has helped keep Bitcoin's price within the upper portion of its recent trading range, even as derivatives markets displayed short-term bearishness.
Significant Liquidations on Derivatives Exchanges
Crypto analyst Dom highlighted the scale of the recent liquidations, noting it was one of the largest for long positions in recent months. He reported that nearly 80% of these liquidations were concentrated on the Bybit exchange. Large, concentrated liquidation events often mark local price bottoms, as the forced selling pressure subsides and allows the market to stabilize.
Key Bitcoin Price Levels to Monitor
As Bitcoin trades in this contested territory, analysts have identified three critical price zones that could determine its next major directional move. Each level represents a potential battleground between buyers and sellers, with different implications for the market's structure.
The Immediate Demand Zone: $110,700 to $113,200
The most immediate area of interest is the current demand zone between $110,700 and $113,200. A strong and rapid price bounce from this level would lend credibility to the theory that the recent dip was primarily a technical event designed to flush out leverage. If buyers step in aggressively here, it could signal that the broader bullish structure remains intact, potentially setting the stage for another attempt to break above $117,000.
The Deeper Liquidity Level: $107,200
Should the rebound from the current zone be weak or fail altogether, the next major support level is located around $107,200. This price point is significant because a substantial amount of liquidity, including over $3 billion in remaining long positions, is concentrated there. A move down to this level could be a deeper "liquidity grab" to shake out more traders before a potential reversal.
"From a seasonality perspective, September has historically leaned bearish, making this scenario plausible as a short-term shakeout before stronger upside momentum into Q4."
This historical tendency adds weight to the possibility of a temporary dip to this external support level before the primary uptrend resumes.
The Bearish Breakdown Scenario: Below $107,200
The most concerning outcome for bulls would be a sustained break below the $107,200 support. Such a move could trigger a more profound correction, with the next major psychological and technical level being $100,000. A breakdown of this magnitude would likely represent a significant shift in market structure, potentially signaling that the current bullish cycle is exhausted and a longer period of consolidation or bearish action is ahead.
Glassnode's Short-Term Holder Metric
Data from Glassnode adds another layer to this analysis. The firm's metrics show that the cost basis for short-term holders—investors who have held Bitcoin for less than 155 days—is currently around $111,400. This price level is considered a crucial psychological "battle line." If Bitcoin trades below this average cost for an extended period, it could pressure these newer investors to sell at a loss, adding to the downward momentum and confirming a shift toward a more bearish mid-term outlook.
