Bitcoin's Key Support Breach and Whale Activity Signal Market Caution
By: Eva Baxter
Bitcoin has recently breached a significant support level at $115,800, leading to a broader market de-risking as altcoin traders capitulated, indicating a dwindling risk appetite among investors. According to the Bitfinex Alpha report, Bitcoin (BTC) slipped below its three-week range floor, with BTC reaching $112,722.10 during early trading. This downward move converted former support into potential resistance. This shift follows a period of weakening order flow and open interest showing traders rotating into Ethereum (ETH) and other high-beta assets, which saw a sharp downturn as altcoins outside the top 10 plunged by 16.3% between late July and early August, wiping out about $40 billion.
The synchronized decline across major assets suggests a market-wide de-risking rather than a simple rotation in leadership. Bitcoin has fallen 6.6% from its all-time high of $123,054, while Ethereum is down 9% from its recent local peak. Meanwhile, the broader altcoin market started the week strong but gave back gains quickly. Despite the previous week's declines, assets like ENA and PENGU showed resilience with weekly increases of 14% and 8.4% but are now encountering corrections. Leverage has magnified these moves, with liquidations on centralized platforms exceeding $1 billion as momentum stalled. While BTC led the downturn, long liquidations on ETH were significant, as traders rushed into catch-up bets after ETH's previous underperformance.
The recent market activity has been marked by a "cleansing" event setting the stage for potential volatility in bitcoin and other assets. The Bitfinex report highlights the need for caution, with Bitcoin currently showing structural strength by maintaining a market cap above $2.2 trillion. However, its performance has diverged significantly from other crypto assets still unable to surpass their 2021 highs. Indicators showed Bitcoin was undergoing a tactical rebound fueled by oversold conditions but warned about a potential consolidation or further corrections without evidence of aggressive buying or large ETF inflows.
In parallel, whale activity indicates fragility within the market. "Old whales" who have held BTC for over a year have paused their profit realization, as depicted by CryptoQuant data, while "new whales" remain slightly profitable with an average breakeven cost of $105,300. Significant market movements below this critical level may trigger a wave of risk-off behavior among new whales, leading to leverage unwinds and potential panic selling. Attention to realized price levels is crucial, as any pricing deviations could prompt sharp market corrections. Currently, Bitcoin is trading around $113,500, highlighting the need for vigilance among investors as possible short-term weaknesses loom.
