Bitcoin Analysts See ‘Cycle Exhaustion’ as BTC Price Plunges to $112K

Key takeaways:

• Bitcoin dropped 4% to $112,000 in a marketwide correction, liquidating $1.6 billion in longs.

• Analysts say the BTC bull market may have run its course, based on several bearish onchain signals.

Bitcoin bears extended sell-side activity into the weekly open on Monday as a drop to $112,000  resulted in a large liquidation of leveraged positions across the crypto market.

According to analysts, Bitcoin showed signs of “cycle exhaustion,” pointing to further downside. 

Bitcoin wipes out liquidity in drop to $112,000

Bitcoin (BTC) price fell as low as $111,980 on Monday, down 4% in the past 24 hours, amid a broader market tumble, per Cointelegraph Markets Pro and TradingView.

This extended the deviation from the Aug. 14 all-time high of $124,500 to 10% and was accompanied by massive liquidations across the derivatives market.

Related: Biggest long liquidation of the year: 5 things to know in Bitcoin this week

Over $1.62 billion in long positions was liquidated, with Ether (ETH) accounting for $479.6 million. Bitcoin followed with $277.5 million in long liquidations.

Across the board, a total of $1.7 billion was wiped out of the market in short and long positions, as shown in the figure below.

The sudden market drop led to the liquidation of 402,730 traders over the period, catching many off guard as investor sentiment flipped bearish.

The Bitcoin liquidation heatmap showed the price eating away liquidity around $112,000, with more than $400 million bid orders between $111,500 and $110,000. 

This suggests that Bitcoin’s price might drop further to sweep this liquidity before any potential recovery.

Is the Bitcoin bull cycle out of steam?

The Fed’s interest rate cut last week, which was once viewed as a vital bullish catalyst for BTC, failed to push markets higher, implying that the Bitcoin bull cycle may have run its course. 

“Bitcoin is already showing signs of cycle exhaustion and very few are seeing it,” said Alphractal founder Joao Wedson in an X post on Monday. 

Several onchain signals now warn that Bitcoin’s rally may have run out of steam.

Bitcoin’s Spent Output Profit Ratio (SOPR), a metric that measures the overall profitability of all spent Bitcoin transactions on the blockchain, showed fading profitability, raising chances of a deeper correction.

The Sharpe ratio was weaker than in 2024, meaning risk vs return and profit potential were lower. 

“This won’t attract as many institutions as most people believe,” said Wedson, adding:

“Even if BTC hits new all-time highs, profitability will remain low, and the real focus will be on altcoins.”

Bitcoin’s taker buy/sell ratio across all exchanges, a metric gauging market sentiment, was at -0.79, according to data from CryptoQuant.

When the metric dips below 1, it indicates that bears are in control of the market, and when the metric is above 1, it shows that bulls are in control.

The ratio at -0.79 indicates that active selling volume (taker sell) now outpaces buying, reflecting negative trader sentiment.

The last time similar levels were observed was at the Jan. 20 peak, when Bitcoin reached the $109,000 range before entering a three-month correction period that saw BTC price drop by 32% to $74,000 in April. 

The taker buy/sell ratio reinforces that the market is in a critical zone, as growing selling pressure exposes weaknesses in Bitcoin’s price structure. 

As Cointelegraph reported, analysts are now mixed on the possibility of a rally in October after markets turned bearish on Monday.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.