Bitcoin Dips Below $113K, Tests Support Amid Fed Uncertainty
Bitcoin support was tested after prices dropped below $113,000 following a rapid rally to $124,128. The pullback was driven by rising Treasury yields, a hotter-than-expected July Consumer Price Index (CPI) reading and profit-taking. Leveraged liquidations added downward pressure, with data showing $559 million in position closures, including $487 million in long liquidations.
The stronger U.S. inflation data kept Federal Reserve rate-hike expectations elevated. Short-term selling spread across risk assets. Bitcoin support near $113,000 appeared critical for market stability. Ethereum (ETH), Solana (SOL) and XRP also fell amid broader risk-off flows, down 4.6%, 3.5% and 6.7% respectively.
Traders should monitor upcoming Fed minutes, Jackson Hole remarks and Treasury yield movements for clues on recovery. Stable or easing yield trends could help Bitcoin support hold. However, persistent inflation pressure or further liquidations may extend the pullback.
Bearish
The brief drop below $113,000 tests a critical support level, signaling short-term bearish sentiment. Rising Treasury yields and stronger CPI pointed to persistent inflation, reinforcing market expectations of a hawkish Federal Reserve. Similar sell-offs occurred in May 2021 and September 2022 when hawkish Fed signals and rising yields triggered leveraged liquidations across cryptocurrencies. The $559 million of closures, largely long positions, intensified downward momentum. In the short term, traders may remain cautious until key data—Fed minutes, Jackson Hole speeches and CPI reports—indicate easing pressure. In the long term, if inflation recedes and yields stabilize, Bitcoin could rebound from support. However, sustained macro uncertainty and liquidation cascades may extend the correction.