Bitcoin's $113K Correction: Strategic Entry Points Amid Volatility

Bitcoin's recent drop below $113,000 has triggered a wave of panic, with over $1.7 billion in leveraged long positions liquidated in 24 hoursBitcoin BTC Price Dips Below $113K as $1B Longs Get Wiped Out^[1]. While the broader crypto market has contracted to $3.89 trillionBitcoin Whale Activity Surges, Indicating Potential Market Shifts^[2], this correction aligns with historical patterns and presents a unique opportunity for disciplined investors. By analyzing technical indicators, on-chain metrics, and investor sentiment, we can identify strategic entry points amid the volatility.

Market Context: A Correction in a Bull Cycle

Bitcoin's decline below the critical $115,000 support levelBitcoin Price Forecast: BTC Bears Aiming for Levels Below $107,000^[4] has reignited bearish narratives, yet the broader picture remains bullish. The asset is still trading above its 200-day moving average—a key indicator of long-term strength—and institutional ETF inflows continue to defy short-term weaknessBitcoin BTC Price Dips Below $113K as $1B Longs Get Wiped Out^[1]. Historically, September has been a weak month for Bitcoin, but macroeconomic tailwinds, including Federal Reserve rate cuts and a weaker U.S. dollar, could catalyze a reboundPocket Option Bitcoin Prediction 2025: Multi-Factor Analysis^[5].

This correction mirrors past bearish phases, such as the 2018 crash (from $19,533 to $3,200) and the 2022 bear market (77% decline over 12 months)Bitcoin’s Fear & Greed Index Near Historic Low^[3]. In each case, investor sentiment metrics like the Crypto Fear & Greed Index and Bitcoin Misery Index (BMI) signaled oversold conditions before rebounds. Today, the Fear & Greed Index is near “Extreme Fear” levels (0–25), a contrarian signal historically correlated with price recoveriesFear & Greed Index Trading Strategy: Entry and Exit^[6].

Strategic Entry Points: Technical and On-Chain Signals

1. Support Levels and Fibonacci Retracements
2. Immediate support sits at $112,000 and $110,000Bitcoin Price Forecast: BTC Bears Aiming for Levels Below $107,000^[4]. A breakdown below $105,000 could retest the $100,000 level, but historical data suggests these dips often attract accumulationPocket Option Bitcoin Prediction 2025: Multi-Factor Analysis^[5].
3. Fibonacci retracement levels at 50% ($111,500) and 61.8% ($110,000) act as psychological barriers. A bounce from these levels could validate a bullish reversal.

4. RSI indicators showing oversold conditions (below 30) have historically signaled short-term buying opportunitiesBitcoin BTC Price Dips Below $113K as $1B Longs Get Wiped Out^[1].

5. On-Chain Metrics

6. The MVRV Z-Score, which measures overvaluation, has normalized after peaking near 7 in late 2024Bitcoin’s Fear & Greed Index Near Historic Low^[3]. A score below 3 indicates undervaluation, suggesting a potential bottom.

7. Percent of Supply in Profit (PSiP) has dropped to 30%, indicating widespread capitulation. Historically, PSiP below 20% has marked bottomsBitcoin’s Fear & Greed Index Near Historic Low^[3].

8. Dollar-Cost Averaging (DCA) and Institutional Accumulation

9. DCA strategies near $111,900 and high-conviction buys below $100,000 are optimalBitcoin Whale Activity Surges, Indicating Potential Market Shifts^[2]. Institutional players, including Michael Saylor and El Salvador's government, have added to positions during dipsBitcoin’s Fear & Greed Index Near Historic Low^[3].
10. Whale activity has surged to multi-year highs, often preceding major price shiftsBitcoin Whale Activity Surges, Indicating Potential Market Shifts^[2].

Investor Sentiment: Fear as a Catalyst

Bitcoin's price is inextricably linked to investor sentiment. Studies show a robust correlation between rising sentiment and price increases, even when controlling for macroeconomic variablesInvestor Sentiment and Bitcoin Prices^[7]. During the 2022 bear market, the BMI hit extreme bearish levels (below 27), signaling oversold conditionsBitcoin BTC Price Dips Below $113K as $1B Longs Get Wiped Out^[1]. Today's sentiment mirrors this, with retail demand at historic lows but institutional demand intactPocket Option Bitcoin Prediction 2025: Multi-Factor Analysis^[5].

The Fear & Greed Index has historically predicted recoveries when below 42Fear & Greed Index Trading Strategy: Entry and Exit^[6]. For example, during the 2020 “Black Thursday” crash, the index hit “Extreme Fear,” followed by a 200% rebound in six months. Similar dynamics could unfold here.

Macro Tailwinds and the Halving Effect

The 2024 halving event (April 2024) reduced Bitcoin's supply, historically triggering bull markets. Post-halving cycles have delivered 150–400% returnsPocket Option Bitcoin Prediction 2025: Multi-Factor Analysis^[5]. With the next halving still over a year away, the current correction could be a pre-halving accumulation phase.

Federal Reserve rate cuts and a weaker dollar also favor Bitcoin. As a non-yielding asset, Bitcoin benefits from lower opportunity costs when interest rates declinePocket Option Bitcoin Prediction 2025: Multi-Factor Analysis^[5].

Conclusion: Volatility as an Opportunity

Bitcoin's $113,000 correction is a test of conviction for long-term investors. While the short-term outlook is uncertain, historical patterns and on-chain data suggest this dip is a strategic entry point. By combining technical analysis, sentiment metrics, and macroeconomic insights, investors can navigate volatility with discipline.

As always, risk management is critical. Position sizing, stop-loss orders, and a focus on long-term fundamentals will separate winners from losers in this cycle.