Bitcoin (BTC), the world’s first digital currency, surprised investors on Tuesday after it fell below $113,000 for the first time in more than two weeks, triggering over $101 million in leveraged long position liquidations.
The sharp drop came just days after Bitcoin hit an all-time high (ATH) of $124,196 on August 14, raising fresh questions about whether the bull market is slowing.
At the time of writing, Bitcoin’s price recovered slightly to $113,632, down 1.12% in the past 24 hours, with a 24-hour trading volume of $72.7 billion, according to CoinMarketCap, a popular crypto price-tracking website.
Why the Drop Happened?
The correction gained momentum after reports that the U.S. Securities and Exchange Commission (SEC) is investigating alleged fraud and stock manipulation at Alt5 Sigma, a financial firm that recently signed a $1.5 billion partnership with World Liberty Financial (WLFi).
WLFi, co-founded by the U.S. President Donald Trump, has raised $550 million through token sales. Trump disclosed earning $57.4 million from his stake in June, while his son Eric Trump is set to join Alt5 Sigma’s board.
Adding to the pressure, investors reacted to a 1.5% drop in the Nasdaq 100 after MIT NANDA research showed 95% of companies failed to gain quick revenue from AI pilot projects. The new 50% import tariffs on 407 products by Washington further shook confidence and stoked inflation fears.
In futures markets, open interest had surged to “statistical extremes,” meaning an unusually large amount of borrowed money was betting on a continued rally. This created a fragile environment that led to a cascade of forced selling, or deleveraging, when prices began to fall. Simultaneously, blockchain analytics firm Glassnode noted Bitcoin options showed extreme fear, with the 30-day delta skew hitting 12%, its highest in four months, a signal that traders were rushing to buy “downside protection.”
These factors caused investors to seek safe havens. UBS raised its gold forecast to $3,700 by 2026. Despite the panic, analysts say fear often overshoots reality. Bitcoin’s longer-term bull run remains intact, and the crypto may benefit if investors exit riskier stocks.