Bitcoin Dips as U.S Inflation Jitters and Tech Stock Sell-Off Intensify
Bitcoin dropped below $113K during the mid-week trading session as traders took profits in the cryptocurrency market.
The leading cryptocurrency traded under an upward trendline formed by connecting several lows since early April.
At that time, Bitcoin also closed below the 50-day Exponential Moving Average (EMA) of $114,903.
BTC experienced its first monthly loss since March, as macroeconomic challenges began to emerge after four consecutive months of gains.
Bitcoin had surged 66% from its lowest to its highest prices in 2025. However, it faced significant resistance at $125,000 late last week, which indicated signs of weakness.
Expectations for aggressive interest rate cuts by the end of the year were moderated following a strong report on the U.S. Producer Price Index (PPI) inflation. This led to a more pronounced pullback, which affected risk appetite across the cryptocurrency markets.
Bitcoin’s Price Action shows Bearish Momentum
The Relative Strength Index (RSI) shows a bearish momentum with a reading of 41, which is below the neutral level of 50 via the daily chart.
The Moving Average Convergence Divergence (MACD) indicated a bearish crossover, suggesting a declining trend. Despite geopolitical tensions and unprecedented central bank purchases pushing gold to historic highs, Bitcoin, like other U.S. tech stocks, remains tied to riskier assets.
Traders are closely monitoring developments in both traditional and cryptocurrency markets amid ongoing economic uncertainty. The Federal Reserve’s meeting in September may be critical for the cryptocurrency market, and Bitcoin’s reputation as “digital gold” might face scrutiny in the coming weeks.
Notably, Bitcoin reached its highest point ever on August 14 at $124,517, precisely one month after hitting its previous peak on July 14 at $123,236. This week, a sell-off in overpriced technology stocks, which are linked to Bitcoin and other cryptocurrencies, has exacerbated the decline in Bitcoin.
This led to the selling of leveraged cryptocurrency holdings, which in turn caused Bitcoin to plummet to an overnight low of $112,580, a 9.5 percent decline from its most recent peak of $124,517. Ether also entered a support range between $4100-$4000 amid the recent blood bath
The news that a staggering $500 million worth of Bitcoin was liquidated in just one day has heightened traders’ concerns. Anyone attempting to traverse this unstable terrain needs to have a solid understanding of liquidations, as the market is currently approaching the critical support threshold of about $112,000 in value. Now, the stakes are higher.
Bitcoin holds institutional support
The 2025 trajectory shows remarkable growth, rising from a low of $81,975 in February to current levels of $113K. This growth includes institutional distribution occurring near cycle highs. The current pullback is not indicative of a fundamental breakdown but rather a natural correction following a 39 percent increase from the lows in August.
The pioneer crypto asset market dominance currently stands at 58%, indicating a slight decline compared to altcoins during times of institutional selling.
Furthermore, the 8.55% gap from its all-time high of $124,457 on August 14 suggests that we are nearing recent distribution zones where institutions often take profits.
Bitcoin’s market capitalization of $2.26 trillion allows it to maintain its leading position despite the challenges posed by institutional distribution. The decline in BTC market valuation follows a decrease in trading volume to $66 billion as institutions gradually distribute their positions, which suggests a consolidation rather than panic selling.
