Bitcoin has dropped below the $113,000 threshold for the first time in over two weeks, surprising investors and leading to the liquidation of $113 million in leveraged long positions. This sharp decline followed an all-time high of $124,176 on Thursday, raising questions about the potential end of the bull market as the macroeconomic environment becomes increasingly unstable.
SEC investigation and disappointments over corporate AI
The price correction of Bitcoin has intensified following reports that the U.S. Securities and Exchange Commission (SEC) is investigating fraudulent activities and stock manipulation at Alt5 Sigma, a company that recently partnered with President Donald Trump's World Liberty Financial in a $1.5 billion deal.
World Liberty, the company that lists President Donald Trump as an 'honorary co-founder,' has raised approximately $550 million through two public token sales, promoting itself as a DeFi and stablecoin platform. In June, Trump revealed that he earned $57.4 million from his stake in World Liberty Financial, while Eric Trump is expected to join the board of Alt5 Sigma.
Cryptocurrency investors have also reacted to the 1.5% decline of the Nasdaq 100, after an MIT NANDA study, based on 150 business interviews and 300 public AI deployments, showed that 95% of companies did not achieve rapid revenue growth from AI pilot programs.
U.S. import taxes and weakening confidence in the Fed
Another factor contributing to the risk caution is the new U.S. import tax, which imposes a 50% tariff on 407 additional products containing aluminum and steel. Affected items include everyday products such as auto parts, plastics, and specialty chemicals, raising economists' concerns about potential supply chain disruptions and rising consumer prices.
Investment bank UBS has raised its gold price forecast to $3,700 by September 2026, according to CNBC. UBS strategists predict that gold prices will recover from below-trend economic growth, the Federal Reserve's policy easing, and a weaker dollar. Concerns over the U.S. budget deficit and questions about the Fed's independence also contribute to shaping this outlook.
Amid growing concerns about the contraction of the economy and the potential impact on companies related to Trump's World Liberty Financial, the demand for risk protection has surged significantly in Bitcoin derivatives markets. The delta gap index of BTC options shifted to a downward trend on Friday and continued to deteriorate, reflecting increased investor caution.
The delta gap index of Bitcoin options over 30 days (put-call) surged to 12%, the highest in over four months. Under neutral conditions, this index typically fluctuates between -6% and +6%, reflecting the balanced price level for call and put options. Levels above 10% signal extreme fear but are rarely sustained for long.
Previously, a surge to a 13% delta gap occurred on April 7, when Bitcoin dropped below $74,500 for the first time in five months. Risk-accepting investors at that time saw a 40% profit in the following month as Bitcoin rose to $104,150 on May 8.
Currently, there is no clear evidence that the Bitcoin price surge has ended. Investor fears often exceed reasonable expectations. In fact, cryptocurrencies may even benefit from potential inflows in the stock market, suggesting that the current volatility does not undermine the long-term bullish trend of the market.