Bitcoin's Dip Sparks Debate: Bullish Fundamentals or Looming Correction?

Bitcoin fell below $113,000 in early August amid weak U.S. jobs data and broader macroeconomic uncertainty, marking one of its sharpest corrections after reaching an all-time high of $124,474 earlier in the week. The pullback triggered the liquidation of $113 million in leveraged long positions, raising concerns over the sustainability of the ongoing bull market. Despite the short-term volatility, many analysts argue that the downturn does not signal the end of Bitcoin’s long-term bullish trajectory.

The decline followed reports of an SEC investigation into Alt5 Sigma, a firm linked to U.S. President Trump’s World Liberty Financial in a $1.5 billion partnership. This, combined with broader macroeconomic concerns—such as rising U.S. import tariffs on steel and aluminum—heightened risk-off sentiment across markets. Additionally, the Nasdaq 100 fell by 1.5% after MIT research revealed that 95% of companies failed to generate significant revenue from AI pilot programs, further contributing to investor caution.

Despite the correction, historical trends suggest Bitcoin has a strong potential for recovery. A similar pullback in April 2023 saw Bitcoin briefly drop below $74,500 before rebounding with a 40% rally in just a month. Analysts continue to highlight that no concrete evidence has emerged to confirm the end of the bull market, and current volatility may present buying opportunities as sentiment stabilizes.

Looking ahead, Bitcoin’s trajectory in the fourth quarter appears optimistic. Bond market pressures, which have historically coincided with Bitcoin cycle bottoms, are rising as U.S. debt exceeds $37 trillion and 10-year yields climb. UBS, which raised its gold price forecast to $3,700 by September 2026, attributes this to a weak dollar and concerns over fiscal policy and Federal Reserve independence. These factors, combined with a lack of significant bearish momentum, have fueled speculation that Bitcoin could rally to as high as $185,000 by the end of the year.

Institutional demand has remained a key driver of Bitcoin’s performance, with major fund inflows and growing corporate treasury allocations reinforcing bullish sentiment. Over the past week alone, Ethereum ETFs alone saw $1.01 billion in inflows—marking the largest single-day inflow since their launch. Ethereum, in particular, has outperformed Bitcoin year-to-date, with fund inflows reaching $10.5 billion and assets under management surpassing $38.7 billion. JPMorgan analysts attribute Ethereum’s strong performance to its role in the stablecoin ecosystem, which continues to expand as Wall Street increases its use of Ethereum-based stablecoins.

From a technical perspective, Bitcoin faces critical support levels at $112,000 and $117,000, which traders and analysts closely monitor for signs of stabilization. Shubh Varma of Hyblock noted that liquidity dynamics played a major role in the recent sell-off, with liquidity being "swept" on the downside due to thin trading volumes. Despite this, open interest has increased, suggesting that both long and short positions are now more firmly established. Varma believes this could act as a catalyst for a potential rebound.

Meanwhile, Bitcoin’s open interest and funding rates remain strong, with contract open interest rising on major exchanges, indicating that speculative bullish sentiment has not waned. The broader cryptocurrency market also shows resilience, with Ethereum experiencing a 60% price surge in the past month and the altcoin season index rotating toward major coins like Ethereum. Fundstrat, a leading digital asset research firm, has positioned Ethereum as the “biggest macro trade” for the next 10–15 years, projecting prices as high as $15,000 by the end of 2025.

Despite short-term volatility, the underlying fundamentals—driven by institutional adoption, ETF inflows, and macroeconomic trends—suggest that Bitcoin remains on a long-term upward trajectory. While further corrections cannot be ruled out, the market is showing signs of resilience, with analysts and investors alike keeping a close eye on key support levels and macroeconomic developments in the coming months.