Bitcoin Breaks Below $115K: Technical Breakdown, Liquidations & Altseason Threaten BTC Dominance
Muhammad Faraz 
Bitcoin Breaks Below $115K Technical Breakdown, Liquidations & Altseason Threaten BTC Dominance
Bitcoin (BTC) has faced a notable pullback, dropping 1.99% to $115,501 in the past 24 hours and extending its weekly decline to 5.1%. This downward movement follows a period of consolidation near all-time highs, suggesting a shift in market dynamics.
Three primary factors are driving this correction:
- Technical Breakdown – BTC breached critical support levels, triggering automated sell-offs.
- Leverage Unwinding – Over $1 billion in long positions were liquidated, exacerbating the drop.
- Altcoin Rotation – Traders are shifting capital to altcoins, reducing Bitcoin’s market dominance.
This article provides a detailed analysis of these factors, explores potential next moves for BTC, and examines whether this dip presents a buying opportunity or signals further downside.
1. Technical Breakdown: Why $118,500 Was a Critical Level
Bitcoin’s recent decline accelerated after it broke below $118,500, a key support level that had held since early August. This breakdown also coincided with a drop below the 100-hour Simple Moving Average (SMA), invalidating the short-term bullish structure.
Key technical indicators now suggest further downside potential:
- MACD Deepening in Negative Territory (-85.32) – Indicates increasing bearish momentum.
- RSI at 47.24 – Neither oversold nor overbought, leaving room for continued selling pressure.
- Fibonacci Retracement Levels – The 23.6% Fib level ($121,504) now acts as resistance, while the 38.2% level ($119,677) could be the next hurdle if BTC attempts a recovery.
What This Means for Traders
- Algorithmic Selling Pressure – Many trading bots and institutional systems are programmed to sell when key support levels break, exacerbating declines.
- Potential for Further Losses – If Bitcoin fails to reclaim $115,000, the next major support lies near $112,000 (50% Fib level).
- Bullish Case Still Intact? – A quick recovery above $118,500 could signal a false breakdown and resume the uptrend.
What to Watch Next
- Daily Close Above $115,000 – A sustained hold here may prevent deeper losses.
- Rejection at $118,500 – If BTC retests this level but fails, it could confirm a bearish trend reversal.
2. Leverage Unwinding: How $1B+ in Liquidations Fueled the Drop
Bitcoin’s drop from $124,000 to $118,000 last week triggered over $1 billion in long liquidations, according to Galaxy Research. The derivatives market saw a 14.5% surge in open interest, indicating traders were doubling down on leveraged positions just before the decline.
Key Data Points
- $903B in Open Interest – High leverage means even small price swings can cause cascading liquidations.
- $103M in 24-Hour Liquidations – A 3,577% spike in forced selling contributed to the downward spiral.
- Funding Rates Turn Negative – Some perpetual contracts now have slightly negative funding rates, suggesting traders are cautious about reopening longs.
Why This Matters
- Leverage Magnifies Volatility – Excessive speculative positions lead to sharper corrections when the market turns.
- Margin Calls Forced Selling – Traders with leveraged longs were forced to sell, accelerating the decline.
- Potential for Short Squeeze? – If BTC rebounds, over-leveraged shorts could fuel a rapid upside move.
What to Watch Next
- Open Interest Trends – A decline could signal reduced leverage and a healthier market structure.
- Funding Rate Rebound – Positive funding rates may indicate renewed bullish sentiment.
3. Altcoin Rotation: Is Capital Fleeing Bitcoin for Higher-Risk Plays?
While Bitcoin struggles, altcoins have seen relative strength, with the Altseason Index jumping 48% in a week. Bitcoin’s dominance has dipped 1.78% to 58.9%, marking the first time since 2024 that altcoin liquidations surpassed BTC’s (CryptoQuant).
Key Altcoin Performers
- Ethereum (ETH) – Up 3.2% amid growing Layer 2 adoption.
- Solana (SOL) – Gained 5.8% as meme coin activity resurges.
- Toncoin (TON) – Surged 12% due to Telegram ecosystem growth.
What This Means for Bitcoin
- Short-Term Bearish Pressure – Traders rotating into altcoins may delay BTC’s recovery.
- Long-Term Neutral/Bullish – Historically, strong altcoin seasons precede renewed Bitcoin rallies.
- Market Resilience – The total crypto market cap only fell 2.28%, suggesting capital isn’t exiting crypto entirely—just redistributing.
What to Watch Next
- Bitcoin Dominance Rebound? – If BTC dominance stabilizes, it could signal a return of institutional focus.
- Altcoin Sustainability – If altcoins continue outperforming, Bitcoin may remain range-bound.
Conclusion: Is Bitcoin’s Pullback a Buying Opportunity or Warning Sign?
Bitcoin’s recent decline stems from a mix of technical breakdowns, excessive leverage unwinding, and altcoin rotation. While the short-term outlook appears cautious, several factors could dictate BTC’s next move:
Bullish Factors
✅ Institutional Demand Remains Strong – Spot Bitcoin ETFs continue seeing inflows.
✅ Long-Term Holders Aren’t Selling – Over 67% of BTC supply hasn’t moved in over a year.
✅ Fed Rate Cuts Looming – Potential September cuts could reignite risk appetite.
Bearish Risks
❌ Further Breakdown Below $115,000 – Could trigger another wave of liquidations.
❌ Options Expiry Impact – $5.6B in BTC options expire Friday, possibly increasing volatility.
❌ Macro Uncertainty – If inflation fears return, crypto may face broader sell-offs.
Final Verdict
- Short-Term Traders – Watch $115,000 support; a breakdown could lead to $112,000 or lower.
- Long-Term Investors – This dip may present a strategic accumulation zone before the next leg up.
- Altcoin Traders – Monitor whether capital continues flowing into alts or returns to BTC.
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