Bitcoin’s historic surge past $100,000 was short-lived, as the flagship cryptocurrency swiftly reversed course, plunging to a low of $90,500 in a dramatic intraday collapse. While the price spike marked a psychological milestone for the market, its rapid retreat highlighted growing vulnerabilities beneath the surface. On-chain data and market sentiment indicators had already signaled potential trouble—excessive leverage, slowing buying momentum, and weakening fundamentals. Analysts from CryptoQuant and Glassnode are now cautioning investors that the rally may be overheating.
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Early Warning Signs: On-Chain Data Foreshadowed the Drop
Despite widespread optimism following Bitcoin’s breakthrough above six figures, subtle but significant shifts were already visible in on-chain metrics. According to Maartunn, a market analyst at CryptoQuant, two key indicators pointed toward an impending correction even before the price began to slide.
1. Declining Buy-Side Momentum on Binance
One of the first red flags was a surge in Binance net taker buy volume just before the crash. At first glance, rising buy volume might suggest strong demand—but in this context, it indicated something more ominous. When large volumes of market orders (taker buys) dominate trading activity, it often reflects panic buying or FOMO-driven speculation rather than sustainable accumulation.
Once these aggressive buyers were exhausted, there was little organic demand left to support further gains. The result? A sharp deceleration in upward momentum, leaving the market vulnerable to a pullback.
2. Leverage-Fueled Rally Sparks Liquidation Cascade
The second major concern was the role of leverage in driving the price surge. Open interest across major futures markets—including Binance and other top exchanges—grew by over 15% in the days leading up to the crash. This means traders were piling into leveraged long positions, betting heavily on continued price increases.
When Bitcoin suddenly reversed, these highly leveraged positions became unsustainable. The subsequent wave of forced liquidations amplified the downward move, triggering what analysts call a "long squeeze." Over 210,000 traders were liquidated in a single day, with more than $1 billion in total positions wiped out across crypto markets.
“A rally driven by leverage is inherently fragile,” said Maartunn in a recent analysis. “Once price momentum stalls, even a small reversal can cascade into widespread liquidations.”
With retail demand reaching a four-year high—measured by 30-day active wallet growth—and market sentiment firmly in “extreme greed” territory, the conditions were ripe for a major correction. The result: one of the largest long liquidation events in over 18 months, with over $150 million in Bitcoin longs alone being closed out.
Glassnode Flags Weakening Fundamentals
Even as headlines celebrated Bitcoin’s entry into the six-digit club, foundational metrics began to diverge from price action. Negentropic, co-founder of on-chain analytics firm Glassnode, issued a timely warning: the Bitcoin Fundamental Index (BFI) has started to weaken.
The BFI combines multiple long-term health indicators—including supply distribution, holder behavior, and network activity—to assess whether price growth is supported by genuine adoption or speculative froth.
“Not to rain on the parade, but… Bitcoin has crossed $100K, yet the Bitcoin Fundamental Index is starting to weaken,” Negentropic tweeted. “This indicator often sends early warning signals—and once confirmed, they’re hard to ignore.”
Historically, BFI weakness has preceded major market corrections. During Q1 2025, for instance, the index began declining ahead of a 25% price drop, accurately signaling that the rally lacked underlying strength.
While Glassnode acknowledges that bullish momentum remains intact for now, sustained divergence between price and fundamentals could foreshadow deeper corrections ahead.
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What This Means for Bitcoin’s Outlook
Despite the sharp pullback, institutional confidence in Bitcoin remains strong. Bernstein Research maintains its bullish forecast, projecting Bitcoin could reach $200,000 by late 2025, driven by increasing institutional adoption and clearer regulatory frameworks.
The firm argues that short-term volatility is inevitable in maturing markets—and that events like the recent flash crash are part of Bitcoin’s price discovery process. Rather than signaling the end of the bull run, Bernstein sees this as a necessary reset that clears out speculative excess.
Still, traders should remain cautious. Key core keywords shaping this market phase include:
- Bitcoin price correction
- on-chain analysis
- crypto leverage risks
- market sentiment indicators
- Bitcoin Fundamental Index (BFI)
- futures liquidation
- institutional adoption
- market cycle dynamics
These factors will play a critical role in determining whether Bitcoin stabilizes above $90K—or if further downside pressure lies ahead.
Frequently Asked Questions (FAQ)
Q: Why did Bitcoin crash after hitting $100K?
A: The crash followed a leveraged rally with slowing buy-side momentum. High open interest and FOMO-driven speculation made the market prone to liquidations when sentiment shifted.
Q: What is the Bitcoin Fundamental Index (BFI)?
A: The BFI is a composite metric developed by Glassnode that evaluates network health and adoption strength. A weakening BFI despite rising prices can signal unsustainable growth.
Q: How much leverage caused the liquidations?
A: Open interest rose over 15% before the drop. With many traders using 10x–25x leverage, even a 10% price decline triggered massive long liquidations—over $1 billion across all cryptos.
Q: Is this correction a sign of a bear market?
A: Not necessarily. Corrections are common during strong bull markets. As long as fundamentals like wallet growth and institutional inflows remain strong, the broader trend may still be upward.
Q: Can Bitcoin recover quickly from $90K?
A: Yes—historical patterns show Bitcoin often rebounds swiftly after sharp drops if demand persists. Support levels around $88K–$90K will be crucial in determining near-term direction.
Q: Are retail investors still buying Bitcoin?
A: Retail demand remains elevated, with 30-day active addresses at a four-year high. However, excessive retail greed can sometimes precede short-term tops.
Looking Ahead: Volatility Ahead Amid Institutional Confidence
While the flash crash shook investor confidence temporarily, it also served as a reminder of Bitcoin’s volatile nature—especially during periods of extreme leverage and speculative enthusiasm. On-chain data continues to provide early warnings that technical charts alone cannot capture.
As market participants digest this correction, attention will shift to whether buying pressure returns at lower levels and if institutional inflows can absorb selling pressure. For now, traders should monitor open interest trends, funding rates, and BFI developments closely.
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Bitcoin’s journey beyond $100K is far from over—but its path forward will likely be anything but smooth. Understanding the interplay between sentiment, leverage, and fundamentals will be key to navigating what comes next.