After setting a new high last week, the cryptocurrency market is experiencing a wave of profit-taking, with both Bitcoin and Ethereum retreating, breaking through the psychological barriers of $113,000 and $4,200, respectively, while overall economic headwinds and rising leverage rates have further compounded the market's difficulties.

Bitcoin today (20th) dipped to a low of $112,647, and at the time of writing, it has rebounded to $113,787, down 0.9% over the past 24 hours.

Chief analyst Alex Kuptsikevich warned that Bitcoin has retreated to price levels from two weeks ago, breaking below the medium-term trend line (50-day moving average), which has intensified investors' concerns about a continued decline in Bitcoin, potentially affecting the entire cryptocurrency market and dragging Bitcoin further down to $100,000, close to the 200-day moving average.

Alex Kuptsikevich added, 'The overall cryptocurrency market capitalization has shrunk by another 0.4%, dropping to $3.87 trillion, and the market has fallen below previous resistance levels, leading speculators to worry about further pullbacks, potentially down to $3.6 trillion.'

Ethereum is also weakening, down 0.9% to $4,195, having fallen over 12% from its recent high, and is retesting the key support level of $4,100. Other mainstream cryptocurrencies are performing even weaker, with Ripple (XRP) once dropping 4.1% to $2.89; Dogecoin (DOGE) falling 2.4% to $0.21, while Cardano (ADA) plummeted 6.6%, becoming the largest loser among major tokens.

Overall economic pressures are intensifying.

Market sentiment quickly turned cold after Bitcoin hit a new high. The latest US inflation data exceeded expectations, cooling the market's anticipation for a rapid rate cut by the Federal Reserve (Fed), prompting short-term traders to take profits.

LMAX Group strategist Joel Kruger pointed out, 'Bitcoin has entered a slight correction phase since hitting a new high last week,' and 'US inflation data exceeding expectations has weakened the market's expectations for a recent Fed rate cut, leading to a pessimistic market sentiment.'

Ethereum's performance also followed suit, with leveraged long positions exacerbating the decline. However, Joel Kruger emphasized that institutional fund inflows into Ethereum products remain strong, with increased ETF flows and corporate treasury allocations indicating that the medium-term outlook still has support.

Leverage risks are intensifying, making market fluctuations inevitable.

Despite the spot market being under pressure, institutional funds are still entering steadily, providing some support for market sentiment. However, the high leverage accumulated in the derivatives market poses greater volatility risks.

Bitget's chief analyst Ryan Lee stated, 'The open interest in the futures market has reached a new high, indicating that leveraged positions are overly accumulated.'

He reminded that leverage is like a double-edged sword: if the market continues to rise, leverage will amplify the gains, but it will also magnify volatility, making Bitcoin and Ethereum more susceptible to drastic fluctuations driven by changes in market sentiment.

Market attention is currently turning to the Jackson Hole Global Central Bank Annual Meeting, where Fed Chairman Jerome Powell will be present to deliver a speech. It is widely believed that Powell's remarks on the policy stance for the fall will lead to synchronized fluctuations in the stock market, foreign exchange, and crypto assets.

The market is trapped in panic, and retail sentiment is pessimistic.

Market sentiment indicators have also undergone drastic changes. Santiment data shows that after Bitcoin fell below $113,000, the attitude of retail traders underwent a 180-degree turn, with the community sentiment in the past 24 hours being the most pessimistic since June 22, when there was also a panic selling wave due to concerns over the Middle East war.

However, Santiment notes that excessive negative sentiment is often a 'buying signal.' When the market experiences 'bloodshed and extreme fear,' it is more likely to brew a short-term rebound.

Currently, the Bitcoin Fear & Greed Index has dropped to 44 (out of 100), falling into the 'fear' range.