Bitcoin News Today: Bitcoin Falls Below $116K, Triggering $600M Liquidations as Traders Flee Fed Uncertainty

Bitcoin’s price fell below the $116,000 threshold on July 7, 2025, triggering a wave of forced liquidations totaling nearly $600 million as traders’ positions were automatically closed due to insufficient collateral. Real-time market data showed that 213,729 traders were affected by the sharp downturn, with long positions accounting for the majority of the sell-off [1]. The collapse occurred amid heightened volatility, as technical analysts had warned that a breakdown below $116K could catalyze a “sharp, directional move” driven by stop-loss orders and margin calls [2].

The drop coincided with uncertainty ahead of the U.S. Federal Reserve’s upcoming policy meeting, which traders viewed as a potential catalyst for further market instability. Bitcoin’s decline was exacerbated by algorithmic trading strategies, where large institutional orders and retail investors’ panic selling accelerated the downward spiral. A report noted that the price slump occurred “in a bloodbath for crypto longs,” underscoring the fragility of leveraged positions in a rapidly shifting market [1].

Technical analysis from July 6 highlighted that Bitcoin’s movement beyond key levels—either a breakout above $120K or a breakdown below $116K—typically signals intensified volatility. The recent breakdown confirmed this pattern, as traders’ pre-set stop-loss orders triggered a cascading effect. This mechanism, common in leveraged crypto trading, amplifies price swings by forcing liquidity to exit the market en masse.

While some price charts, such as those from Coinalyze and TradingView, provided real-time tracking of Bitcoin’s movements, the most immediate impact was the $600 million in liquidations. Analysts emphasized that such events are not uncommon in crypto markets, where leverage ratios are often higher than in traditional financial instruments. However, the scale of this liquidation highlighted the sector’s susceptibility to macroeconomic signals and algorithmic trading dynamics [2][3].

The Fed’s policy decisions and inflation data are frequently cited as factors influencing crypto markets, though direct causality is difficult to establish. The timing of Bitcoin’s drop—just days before the Fed’s meeting—raised questions about whether traders were preemptively adjusting positions to mitigate risk. Meanwhile, the broader market’s reaction suggested that retail investors remained cautious, with many opting to secure profits or hedge against potential rate hikes [4].

Despite the sharp pullback, the Crypto Fear & Greed Index still registered a “Greed” score of 70, indicating that overall market sentiment remains positive. Analysts and market participants continue to forecast bullish price targets. Galaxy Digital CEO Michael Novogratz projected Ether could reach at least $4,000, while Bitfinex analysts suggested Bitcoin’s next major target could be $136,000 if the uptrend continues [1]. Tom Lee from Fundstrat Capital made headlines with a $200,000–$250,000 Bitcoin price target, citing the potential regulatory catalyst of the recently passed GENIUS Act as a driver for broader adoption [1].

Technical levels remain critical for near-term price action. As of July 25, Bitcoin trades around $119,300, slightly below its recent highs but above key exponential moving averages. Short-term support is seen at $118,500, with stronger downside buffers at $117,200. A breakout above $120,250 could reinvigorate the rally toward $123,200, while a retest of $116K would likely trigger further volatility.

The liquidation event underscores the inherent risks of leveraged trading in crypto. Platforms like Coinbase and Phemex reported real-time price movements during the episode, with traders facing sudden margin calls as Bitcoin’s value evaporated. While the price has since stabilized above $116K, the episode highlights the importance of risk management and liquidity monitoring in a market where leveraged positions can rapidly shift from profit to loss.

Sources:

[1] [Bitcoin Tumbles Below $116K in Bloodbath for Crypto Longs](https://where-to-buy.it/news)

[2] [Bitcoin Breakdown? BTC Price Analysis Warns of Sharp Drop Below 111k](https://cryptopotato.com/bitcoin-breakdown-btc-price-analysis-warns-of-sharp-drop-below-111k/?amp)

[3] [BTC/USD Coinbase Live Price Chart](https://coinalyze.net/bitcoin/usd/coinbase/price-chart-live/)

[4] [Bitcoin Price Today: Drops Below $116k Ahead of Fed Meet](https://www.investing.com/crypto/ethereum/eth-usd)