Ethereum also saw heavy liquidation pressures. The blockchain platform, known for decentralized applications, has been facing high volatility amid broader uncertainty in recent weeks.
Gold prices climbed past $4,200 per ounce, gaining over 16% in the past month. Analysts noted that capital has been moving toward gold due to lower volatility and stronger institutional support.
Sean Farrell, head of digital asset strategy at Fundstrat, told Yahoo Finance that investors might later rotate back to Bitcoin as gold’s momentum stabilizes. He said gold’s structural demand from central banks creates temporary pressure on crypto markets.
When Bitcoin prices fell quickly, platforms automatically closed risky trades to limit losses. This caused a chain reaction of forced selling that intensified the decline.
Market data also showed that a large trader, known as a “whale,” shorted Bitcoin and gained $192 million ahead of the crash. The same wallet placed another bearish trade later that week, signaling continued negative sentiment.
Last week, Bitcoin reached an all-time high above $126,000 before the decline. The rally was part of a broader “debasement trade,” where investors seek assets that hedge against weakening currencies.
Investment banks remain optimistic. JPMorgan predicts Bitcoin could rise to $165,000 by year-end, while Citi forecasts a price of $133,000 in the same period and $181,000 by the end of 2026.
Experts note that crypto markets are likely to remain volatile as global economic factors and leveraged trading continue to influence prices.
