Bitcoin's $112k Test: $1.7B Liquidations and Corporate Debt Spark Fragility Fears

Bitcoin traders are closely monitoring key support levels as the cryptocurrency faces renewed volatility amid record liquidations. The price of Bitcoin (BTC) recently dipped to $112,000, triggering over $1.7 billion in leveraged position liquidations—the largest single event of 2025—according to data from Coinglass and CoinGlass. The sell-off disproportionately impacted Ethereum (ETH) and altcoins, with ETH dropping 9% to $4,075 and Dogecoin (DOGE) plunging more than 10%. Over 407,000 traders were liquidated within 24 hours, signaling heightened market fragility.

Analysts are divided on whether the current pullback marks a temporary correction or a deeper bearish phase. Trader Jelle described the $112,000 support level as “very clean,” suggesting a potential rebound to $120,000 if the price reclaims $116,000. Conversely, Captain Faibik warned of a possible breakdown to the $100,000 zone, citing a rising wedge pattern on BTC/USD daily charts. On-chain analytics firm Glassnode highlighted concentrated liquidation clusters around $113,000–$114,000, areas where leveraged positions are particularly vulnerable.

Corporate Bitcoin accumulation remains a double-edged sword. While entities like Strategy (MicroStrategy) and Japanese firm Metaplanet continue buying BTC, their leveraged strategies pose systemic risks. Coinbase Global’s research team cautioned that over 228 public companies now hold 820,000 BTC, with debt-driven forced selling potentially triggering cascading liquidations. “Indiscriminate selling by multiple entities to service debts could destabilize the broader crypto market,” Coinbase noted, referencing convertible bonds maturing as early as 2026.

Technical indicators suggest a mixed outlook. Bitcoin’s RSI of 53.65 indicates neutral momentum, while the 50-day exponential moving average (EMA) at $113,200 remains a critical psychological barrier. The MVRV Z-Score, a metric comparing market value to realized value, shows the market in a “pre-euphoria” phase, with long-term holder (LTH) profits diverging from short-term holders (STH). CryptoQuant analysts noted this divergence historically precedes bull market peaks, though current levels remain below extreme overvaluation thresholds.

Macro factors, including the U.S. Federal Reserve’s policy trajectory, add uncertainty. The Fed’s Personal Consumption Expenditures (PCE) index and Chair Jerome Powell’s remarks this week will be closely watched for signals on rate cuts. Market Mosaic, a trading resource, highlighted that Fed officials remain divided, with seven of 19 dissenting against further easing amid inflationary pressures and weak labor data. Meanwhile, rumors of a U.S. political announcement tied to Bitcoin have already triggered volatility, with traders speculating on a potential “strategic Bitcoin reserve” initiative.

The path forward hinges on Bitcoin’s ability to defend key support levels. A sustained close above $115,000 could reinvigorate bullish momentum, while a break below $107,200 risks a deeper correction toward $100,000. Corporate Bitcoin demand and macroeconomic clarity will likely dictate the next phase of price action. As Axel Adler Jr. of Bitcoinist observed, “The current Z-Score cooling reflects healthier market structure, but volatility remains until direction consolidates.”