Bitcoin Price Plunge: Alarming $1.7 Billion Crypto Liquidations Rock Markets
The cryptocurrency market faced a significant shake-up as the week began. Bitcoin (BTC) experienced a sharp dip, prompting widespread concern among investors. This sudden downturn triggered a massive wave of crypto liquidations, marking a bearish record for 2025. Understanding these market dynamics is crucial for anyone navigating the digital asset space. This article explores the key factors driving recent Bitcoin price movements and what they mean for the future.
Bitcoin Price Action: A Volatile Start to the Week
Bitcoin began the final week of September with considerable volatility. After a relatively flat weekend, BTC price action shifted dramatically. It saw a swift dive to $112,000, according to data from Crypto News Insights Markets Pro and TradingView. This move left many traders questioning immediate market direction.
Traders held divided opinions on the dip’s significance. Some analysts warned of further potential losses. Conversely, others anticipated a rebound, viewing the drop as a possible downside fakeout. Popular trader Jelle, for instance, noted a critical level retest on X. He suggested that holding the higher low at $112,000 could push BTC towards $120,000 next. Jelle emphasized the cleanliness of the retest. He further called for a swift return to the $116,000 region. Reclaiming $118,000 remained his key objective for bullish momentum.
Meanwhile, Captain Faibik offered a more bearish outlook. He had previously warned about buyers getting trapped in August. Indeed, late buyers faced significant losses as Bitcoin dropped 13%. Faibik now anticipates another bearish leg. This could potentially drag BTC down towards the $100,000 zone. His accompanying chart highlighted a breakdown of a rising wedge structure on the daily timeframe.
Popular crypto commentator WhalePanda expressed dismay at Bitcoin’s weakness. This occurred even as gold and US stock markets reached fresh all-time highs. He pointed out $890 million in net inflows from ETFs and MicroStrategy’s continued purchases. Despite these bullish indicators and a rate cut, Bitcoin price remained flat. This discrepancy fueled speculation among some market observers.
Record-Setting Crypto Liquidations: A Bearish Milestone
The overnight dip to $112,000, though ‘only’ 2.8%, caused significant damage. Leverage in the market was particularly vulnerable. Approximately $3,000 of Bitcoin price downside resulted in over $1 billion in crypto liquidations. Monitoring resource CoinGlass reported the figure at $1.7 billion within 24 hours. A staggering $1.62 billion of this comprised long positions. This event marked the largest long liquidation so far this year.
On-chain analytics platform Glassnode further revealed critical details. Longs were especially vulnerable around the $113,000 area. The price drop below $115,000 triggered clustered liquidation levels. Heatmap data clearly showed concentrations around $113,000-$114,000. This highlighted where leverage was most exposed. Trader Daan Crypto Trades observed that $2 billion worth of open interest was erased. He concluded that a ‘big wipe out’ occurred across the board. Now, he advised, traders should seek strength amid the chaos.
Looking ahead, some market participants anticipate worsening conditions. Crypto investor Ted Pillows, for instance, warned that BTC price would likely target a large block of bid liquidity. He predicted over $2 billion in long liquidations between $106,000 and $108,000. A sweep of this level, he believes, seems highly likely in the coming weeks. This would precede any significant upward movement for Bitcoin.
Fed Policy and Economic Outlook: Impact on Bitcoin
Markets are closely monitoring the Federal Reserve’s actions this week. The Personal Consumption Expenditures (PCE) index for August is due for release. This index serves as the Fed’s ‘preferred’ inflation gauge. Its results will offer crucial insights into the economic landscape. Furthermore, several Fed officials will provide commentary. This includes a key speech by Chair Jerome Powell on Tuesday. He will discuss the economic outlook at the Greater Providence Chamber of Commerce 2025 Economic Outlook Luncheon in Warwick, Rhode Island.
The Fed recently cut rates for the first time in 2025. Consequently, markets eagerly await further cues from Powell regarding future policy. Risk assets, including Bitcoin, hope for a more dovish tone. Data from CME Group’s FedWatch Tool indicates strong expectations for another 0.25% reduction. This is anticipated at the Fed’s October 29 meeting. However, trading resource Mosaic Asset Company issued a warning. In its ‘The Market Mosaic’ report, it stated that such a result is far from certain.
Updated projections from the Fed point to a couple more rate cuts before year-end. Nevertheless, these projections are not unanimous. Seven of the 19 officials providing forecasts saw no need for further cuts. The dual threat of rising inflation and recent weakening in labor market data divides central bank officials. This stand-off makes this week’s initial jobless claims particularly important. Traders will watch these for potential snap volatility. Ultimately, Fed policy decisions continue to exert significant influence over broader market analysis.
Massive Political News for Bitcoin: Rumors and Reality
Rumors of a major US political announcement are circulating this week. These reports suggest significant implications for Bitcoin and altcoins. In what some observers suggest is classic market front-running, crypto markets are experiencing declines. This follows reports of ‘massive political news’ spreading across social media platforms. The exact nature of this announcement remains unknown. However, Dennis Porter, CEO and co-founder of digital asset policy lobby Satoshi Fund, made a bold claim on X. He stated that the move, expected Tuesday, would ‘reshape the trajectory of Bitcoin politics.’
Crypto markets have shown sensitivity to promises from US political circles throughout 2025. This sensitivity stems from the initial buzz, and subsequent frustration, surrounding the Strategic Bitcoin Reserve (SBR). The idea of the US government purchasing a giant tranche of BTC initially gained considerable traction. However, successive announcements by the Trump administration failed to enact the policy. Nevertheless, the concept remains far from forgotten. Crypto News Insights continues to report on its ongoing relevance. Alex Thorn, head of firm-wide research at Galaxy Digital, shared his perspective on X earlier this month. He believes a strong chance exists that the US government will announce the formation of the SBR this year. They would formally hold BTC as a strategic asset. Thorn argued that the market had ‘underpriced’ the likelihood of the SBR becoming a reality. Last week, US lawmakers met with crypto market executives, including MicroStrategy’s Michael Saylor. The SBR was reportedly a key topic of discussion. This ongoing Bitcoin news highlights the increasing convergence of traditional politics and digital assets.
Profitability Data Hints at Bull Market Top: A Deeper Market Analysis
Zooming out from short-term Bitcoin price action, new research offers a broader perspective. On-chain analytics platform CryptoQuant concluded that the market is currently in a state of ‘pre-euphoria.’ Their latest ‘Quicktake’ blog post reported a key signal from the Market Value to Realized Value (MVRV) metric. MVRV compares Bitcoin’s market capitalization to the value of the supply at its last movement. The resulting ratio provides insight into whether the market is overvalued or undervalued at a given price point. CryptoQuant specifically utilized the 30-day rolling difference between MVRV values for two Bitcoin investor cohorts: long-term holders (LTH) and short-term holders (STH).
The LTH-MVRV is currently diverging from its STH equivalent. This reflects the increasing profitability of coins held for six months or longer. Contributor Crazzyblockk refers to this phase as ‘pre-euphoria.’ Historically, this phase has served as the direct precursor. It leads to the final, parabolic price surge of each major bull cycle. An accompanying chart illustrates this divergence. It accompanied every Bitcoin cycle top in the past. ‘The current market is mirroring this historical behavior,’ the blog post continued. ‘We have been progressing through a healthy ‘Pre-Euphoria’ stage since the 2022 bottom, building a strong foundation for a major move.’
Crucially, while the MVRV difference is in a clear uptrend, it has not yet reached extreme levels. These extreme levels characterize past market tops. This indicates significant upside potential remains. The cycle’s peak, therefore, is still ahead. This market analysis suggests a long-term bullish outlook. However, it also underscores the importance of monitoring these key on-chain metrics. This article does not contain investment advice or recommendations. Every investment and trading move involves risk. Readers should conduct their own research when making a decision.
