After briefly rising above $117,000 following Federal Reserve Chair Jerome Powell's dovish remarks at Jackson Hole, momentum failed to hold.
Leo Zhao, investment director at MEXC Ventures, stated that bitcoin's drop below $110,000 exposed the fragility of market structure, where thin liquidity, leveraged positions, and substantial ETF capital outflows amplified the sell-off.
After briefly rising above $117,000 following Federal Reserve Chair Jerome Powell's dovish remarks at Jackson Hole, momentum failed to hold.
Zhao stated that this decline reflects "thin liquidity, ETF repositioning, and significant profit-taking by OG BTC holders."
$900M in leveraged cryptocurrency positions were wiped out in the bitcoin sell-off.
Over $900 million in leveraged positions were liquidated, indicating how tight the risk exposure had become before the sell-off intensified.
One of the main triggers was the transfer of 24,000 dormant bitcoins to exchanges, Zhao said, which "cascaded through an already fragile order book" and helped trigger the weekend's flash crash.
The recovery attempt earlier this week stalled at $113,000, indicating that bears are seeking to consolidate control.
Bitcoin exchange-traded funds, which recently provided price support, recorded over $1 billion in outflows last week, the highest level since March. The reversal of stable inflows eliminated a key stabilizing factor.
Meanwhile, investor rotation into Ethereum has accelerated. Zhao pointed out that due to the ETH token's outperformance against bitcoin, products linked to ETH attracted billions in inflows in August, causing BTC to "temporarily lag in the capital rotation cycle."
On-chain data also shows that realized profits have collapsed towards breakeven, reinforcing the waning market confidence.
So far, the short-term rebound is unsustainable, and traders are focusing on downside protection and hedging strategies.
Despite weak retail sentiment, Zhao stated that institutional and sovereign buyers remain active. These participants have been expanding their positions during the pullback while broadening their exposure amid weak retail demand.
Bitcoin is currently at what Zhao calls a "critical inflection point," with two potential paths: consolidating in the $110,000 to $120,000 range or breaking down to test the psychological support level of $105,000 to $100,000.
"The lack of new macro catalysts... as the market digests the recent allocations, could push BTC into a consolidation phase," he said.
The long-term outlook remains intact.
While the near-term outlook appears unstable, Zhao emphasized that the long-term fundamentals for bitcoin remain intact. Institutional accumulation continues to exceed new issuance, resulting in structural supply tightness.
He concluded that once the macro headwinds ease, bitcoin will retain the basis to "attempt again to reach the historical high of $130,000 before EOY."
Leah Wald, CEO of SOL Strategies, stated that bitcoin could see a significant increase this year.
Last week, Wald stated that she believes the world's largest cryptocurrency could rise to around $175,000 by the end of the year, which she considers a conservative target compared to predictions from other top investors and fund managers.
In the long term, Wald noted that ambitious estimates suggest bitcoin could reach $1 million by 2030, highlighting the growing belief among institutional participants.
However, Galaxy Digital CEO Mike Novogratz countered the prediction that bitcoin could reach $1 million in the short term, warning that such a move might reflect a collapse of the U.S. economy rather than a success story for cryptocurrency.
