The shock rippled across markets, pushing the dollar higher, equities lower, and crypto into one of its steepest daily losses in weeks.
Bitcoin led the retreat, sinking to $114,322 as leveraged traders were forced out of positions. The move erased a key support level and sparked over $150 million in liquidations, creating a cascade that amplified losses across the sector.
The market downturn was accelerated by extreme leverage. Open interest in Bitcoin futures had swelled before the selloff, leaving traders exposed once the price cracked below $115K. The flush out of long positions not only closed a CME futures gap from July but also left BTC vulnerable to further losses if it fails to regain momentum above $116K.
The broader market fared no better. Pudgy Penguins (PENGU) stumbled after insiders moved millions in tokens to exchanges, unnerving holders. Injective (INJ) reversed following excitement over its ETF filing, while Sui (SUI) tumbled below support after liquidation spikes. In total, many major tokens posted losses of 10% or more as speculative leverage was wiped out.
The selloff underscored how closely crypto remains linked to traditional assets. With the Nasdaq falling nearly 1% on the same day, Bitcoin’s correlation with the S&P 500 surged to its highest in two months. For now, traders appear to be treating digital assets as risk-sensitive investments rather than safe havens against inflation.
Attention now shifts to Friday’s U.S. jobs data, which could determine whether the Federal Reserve leans toward easing in 2025. A soft labor market report might lift investor sentiment, but if Bitcoin fails to stabilize above current levels, analysts warn the correction could deepen toward $104K.
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