A sharp drop in Bitcoin and other digital assets on Thursday triggered more than $1 billion in leveraged position liquidations, marking the largest single-day flush of long bets since early August. Despite the scale of the sell-off, market strategists say the move represents a normal cooling-off after a record-setting rally rather than the start of a broader reversal.
Bitcoin (BTC) fell 2.3% over the past 24 hours to about $118,000 after hitting an all-time high above $124,000 overnight.
Bitcoin dropped to just under $118,000, source: Bitcoin Liquid Index
The pullback followed hotter-than-expected U.S. Producer Price Index (PPI) data for July, which showed a 3.3% annual rise in wholesale prices. The report dented expectations for multiple Federal Reserve interest-rate cuts this year, trimming the implied probability of a Fed funds rate at or below 3.75% by January 2026 to 61%, down from 67% a week ago, according to CME FedWatch.
The sell-off was accelerated by liquidations of more than $1 billion in leveraged positions, mostly longs betting on higher prices, according to CoinGlass data. It’s the biggest long-side wipeout since a late July–early August decline that saw Bitcoin briefly dip below $112,000 before rebounding.
Some traders also reacted to comments from U.S. Treasury Secretary Scott Bessent, who earlier in the day said the government had no plans to expand Bitcoin purchases for the Strategic Bitcoin Reserve — remarks that appeared to dampen expectations set by a March executive order from President Donald Trump encouraging “budget-neutral” Bitcoin acquisitions.
Speaking early in the day, Bessent told reporters the Strategic Bitcoin Reserve (SBR) would remain limited to the $15–$20 billion worth of bitcoin already held — largely from law enforcement seizures — and that no additional buying was planned.
By late afternoon, however, the secretary had reversed course. In a post on X, Bessent said the Treasury is “committed to exploring budget-neutral pathways to acquire more Bitcoin to expand the reserve.” He emphasized that while seized assets would remain the “foundation” of the SBR, the government is open to finding cost-offsetting mechanisms to add to its holdings.
Treasury is committed to exploring budget-neutral pathways to acquire more Bitcoin to expand the reserve, Source: X
Options Market Signals Stability
Despite the volatility, derivatives data suggest traders are not pricing in significant downside risk. The 30-day BTC options delta skew — a measure of relative demand for puts versus calls — stands at 3%, below the 6% threshold often associated with bearish positioning. This implies a balanced risk outlook and little expectation of a retest of the $110,000 support level.
Macro Risks Remain
While analysts maintain a constructive medium-term view, they caution that stretched valuations, shifting Fed rate expectations, and rising U.S. government debt — now above $37 trillion — could introduce fresh headwinds. Institutional demand, ETF inflows, and global central bank liquidity expansion continue to underpin the bull case for Bitcoin in 2025.
For now, the consensus view is that Thursday’s slide was a healthy shakeout — a market taking a breath after sprinting to record highs.
Source: https://bravenewcoin.com/insights/crypto-market-pullback-wipes-out-1b-in-leverage-but-analysts-see-healthy-correction