Market Panic Sets In as Bitcoin Plunges to $112k – Here’s Why Everyone’s Spooked

Fear grips crypto traders as Bitcoin's floor drops to $112,000—a level that's triggering alarm bells across exchanges.

The Domino Effect

Whales start dumping positions, retail investors follow suit, and suddenly everyone remembers that 'number go up' isn't actually an investment strategy. The usual suspects—leverage liquidations, regulatory murmurs, and that one Elon tweet—all get blamed while portfolios bleed.

Institutional Cold Feet

Even the Wall Street guys who just discovered blockchain last quarter are sweating. Their 'digital gold' narrative looks more like digital fool's gold when the charts flash red for more than five minutes straight.

Where's The Bottom?

Technical analysts draw lines on charts claiming to know, but let's be real—they're just guessing with fancier tools. Meanwhile, the 'buy the dip' crowd is either loading up or quietly switching to stablecoins.

Turns out, a market that runs on sentiment and memes might not be the stable store of value your financial advisor warned you about. Who knew?

Key Takeaways

Bitcoin is down 8% from its ATH, and market sentiment is swinging from greed to fear. STHs are selling at a loss. Does this signal the start of a deeper correction?

Bitcoin [BTC] is cooling off, and short-term traders look like they’re bailing.

On the 16th of August, BTC’s $117k push got rejected, triggering three straight days of net outflows and dropping price to $112k. It was a clear signal that bid-side liquidity in the orderbook is thinning.

Simply put, it was a prime setup for bulls to reinforce support, but the bid wall failed. The result? STH SOPR slid below 1 for the first time in two weeks, marking its deepest realized-loss level in over a month.

Source: CryptoQuant

For context, a SOPR dip below 1 shows short-term holders are capitulating, selling below their cost basis. 

In this case, traders who bought above the $117k zone are likely offloading to break-even, as BTC couldn’t flip that level into support. That left bulls short and bid-side liquidity pretty thin.

That said, early August saw a similar setup. Bitcoin dropped 6% off $118k resistance, sending STH SOPR to 0.99. But once bid-side liquidity reloaded, it sparked a two-week rebound, up to a $124k all-time high.

Bitcoin at a key inflection point

At press time, bitcoin was testing its early-August support. 

Naturally, a chunky bid wall here could flip the tape bullish and squeeze late shorts, but weak bids risk a $117k-style crack. This would, in turn, make a key inflection zone for BTC.

Notably, retail’s stacked long at 61–62% signaled that small traders are leaning bullish, which could backfire. Bid/Ask was shallow at 0.14, slippage 9.4.

Any bounce needs fresh buy flow, or BTC’s rally could fizzle out.

Source: Hyblock Capital

In short, an early-August–style 6% pop looks tough with the current order book stacked against Bitcoin. 

Short-term holders are capitulating, adding selling pressure that could cap bullish conviction. Without fresh buy-side flow, BTC risks grinding lower, with a breakdown below $110k squarely in play.

Overall, retail overexposure and thin liquidity keep rallies muted, setting up a cautious near-term bias.