Bitcoin Price Crash: Why BTC Dropped Below $118k Today
Bitcoin Price Crash: Why BTC Dropped Below $118k Today
Bitcoin price experienced a sharp correction today, falling below the critical $118,000 support level despite recent bullish market sentiment. The cryptocurrency dropped approximately 5% as investors engaged in massive sell-offs and profit-taking activities following Bitcoin's historic run to $123,200.
Key Market Highlights
Bitcoin's dramatic decline comes after reaching multiple all-time highs in recent days. The cryptocurrency currently trades at $116,800 with a market capitalization of $2.32 trillion. Over $500 million was liquidated within 24 hours, affecting 130,573 traders as market conditions shifted rapidly.
Major Factors Behind Bitcoin's Price Decline
Massive Whale Sell-Offs Drive Market Correction
Large-scale investors and mining operations have initiated significant selling pressure on Bitcoin. The Miner Position Index (MPI), which tracks miner outflows relative to a one-year moving average, crossed the critical threshold of 2, indicating substantial selling activity from miners.
Exchange netflow data reveals concerning whale activity, with a Satoshi-era Bitcoin wallet transferring 9,000 BTC on July 14, followed by another 7,843 BTC transfer on July 15, 2025. Nearly $2 billion worth of Bitcoin was transferred to major exchanges including Binance and Bybit, creating intense sell-side pressure.
Macro Economic Events Impact Bitcoin Trading
The cryptocurrency market faced additional pressure from macroeconomic factors during Crypto Week. Key economic data releases including US Consumer Price Index (CPI) and Producer Price Index (PPI) influenced trading decisions and contributed to the sell-off.
Liquidation Cascade Accelerates Price Drop
The rapid price decline triggered a cascade of liquidations, with approximately $400 million in long positions liquidated within just four hours. This forced selling added momentum to the downward price movement, pushing Bitcoin below key support levels.
Technical Analysis Shows Overbought Conditions
Market Indicators Signal Correction
Technical analysis reveals Bitcoin entered overbought territory after its extended rally. The Moving Average Convergence Divergence (MACD) indicator shows a bullish crossover but with declining momentum, suggesting potential weakness in the upward trend.
Investor Sentiment Shifts to Caution
Market sentiment indicators show growing speculation about a potential Bitcoin price crash as investors seek better entry points. Signs of disbelief and trader fatigue have emerged, leading to increased profit-taking activities and contributing to today's correction.
Altcoin Rotation Challenges Bitcoin Dominance
Capital Flows Shift to Alternative Cryptocurrencies
The Altcoin Seasons Index surged nearly 45% over the past week, indicating increased interest in alternative cryptocurrencies. This shift in investor preference has led to capital rotation away from Bitcoin toward other digital assets.
Bitcoin Dominance Declines
Bitcoin's market dominance has fallen from a June high of 65.1% to 63.5%, confirming the capital shift toward altcoins. While experts suggest this represents a mini-season rather than a full altcoin season, the trend is sufficient to divert capital from Bitcoin and pressure its price.
Market Outlook and Recovery Potential
Expert Predictions for Bitcoin Price
Cryptocurrency analysts interpret the current decline as a healthy pullback rather than a prolonged bear market. Some experts suggest Bitcoin may fill the Chicago Mercantile Exchange (CME) gap between $115,635 and $114,380 before resuming its upward trajectory.
Long-Term Investor Rewards
Despite the current correction, long-term Bitcoin investors have been rewarded with a 21% price surge over the past three weeks. The historic all-time high run demonstrates Bitcoin's continued strength and potential for future growth.
Understanding Bitcoin's Current Market Dynamics
Profit-Taking After Historic Highs
After reaching unprecedented price levels above $123,000, profit-taking behavior among investors became inevitable. This natural market correction allows for price consolidation before potential future rallies.
Leverage Market Impact
The high level of leverage in Bitcoin trading contributed to the sharp price movement. As overleveraged positions were liquidated, the selling pressure intensified, creating a feedback loop that accelerated the price decline.
Conclusion
Bitcoin's price decline below $118,000 results from a combination of whale sell-offs, macroeconomic pressures, technical overbought conditions, and natural profit-taking after historic highs. While the current correction may concern short-term traders, many analysts view this as a healthy pullback that could set the stage for future price appreciation.
The cryptocurrency market remains in a state of greed according to sentiment indicators, suggesting underlying bullish conditions persist despite today's decline. Investors should monitor key support levels and market developments as Bitcoin navigates this correction phase.
Frequently Asked Questions
What caused Bitcoin's price to drop below $118,000? Bitcoin's price decline resulted from whale sell-offs, profit-taking activities, over $500 million in liquidations, and capital rotation to altcoins.
How much was liquidated during Bitcoin's price crash? Approximately $500 million was liquidated within 24 hours, affecting 130,573 traders, with $400 million in long positions liquidated within just four hours.
Is capital rotating from Bitcoin to altcoins? Yes, Bitcoin's market dominance decreased from 65.1% to 63.5%, while the Altcoin Seasons Index surged 45%, indicating capital flow toward alternative cryptocurrencies.