FameEX Hot Topics | Why is Bitcoin Dropping, and Could $112K Be the Ultimate Bottom?

Bitcoin’s recent drop below $113,000 caught many by surprise and prompted a sharp correction in the market. The price fell for the first time in over two weeks, following Bitcoin's peak at $124,176. This decline led to the liquidation of $113 million in leveraged long positions, causing many traders to question whether the bull market is truly over. However, despite this short-term volatility, Bitcoin’s long-term bullish trend remains intact for many market analysts.

The correction accelerated after news broke that the US Securities and Exchange Commission (SEC) is reportedly investigating potential fraud and stock manipulation at Alt5 Sigma. This company, which recently partnered with US President Donald Trump’s World Liberty Financial in a $1.5 billion deal, became a focal point for crypto investors concerned about regulatory scrutiny. The SEC investigation further dampened sentiment, adding to the uncertainty surrounding both the crypto and traditional markets.

Alongside the SEC news, the broader economic environment added pressure on the cryptocurrency market. The Nasdaq 100 experienced a 1.5% drop, fueled by a report from MIT NANDA. The study, based on 150 corporate interviews and 300 public AI deployments, found that 95% of companies struggled to achieve significant revenue growth from AI pilot programs. This news fueled market concerns about the potential underperformance of tech stocks, exacerbating risk aversion across financial markets, including cryptocurrencies.

Moreover, the US government imposed a 50% tariff on 407 additional aluminum- and steel-containing products, including everyday goods like car parts, plastics, and specialty chemicals. The move raised concerns about disruptions in supply chains and rising consumer prices, further contributing to investor anxiety. UBS investment bank, however, raised its gold price forecast to $3,700 by September 2026, predicting a rally due to economic slowdown, Federal Reserve policy easing, and a weaker dollar.

Despite these uncertainties, historical patterns suggest Bitcoin’s bull run is far from over. A similar correction occurred in April when Bitcoin fell below $74,500, only to recover with a 40% rally in the following month. Fear-driven sell-offs tend to overshoot rational expectations, and Bitcoin may even benefit from potential outflows in the stock market. As such, this turbulence may not invalidate the cryptocurrency’s longer-term upward trend.

Disclaimer: The information provided in this section is for reference only and does not represent any investment advice or the official views of FameEX.