Analysts flag further downside risk as crypto market retreat triggers $900 million in leveraged liquidations

Bitcoin slid to about $110,000 on Tuesday, dragging the broader crypto market lower as a wave of forced unwinds rippled through derivatives and short-dated volatility spiked ahead of key U.S. economic releases this week.

The Block’s price page shows a collective drop in crypto prices of almost 2%, with downturns in top assets evidenced by a 3% fall in the GMCI 30 index .

“It’s been a bloody start to the week for the majors,” Dr. Sean Dawson, head of research at onchain options exchange Derive.xyz, said, adding that daily BTC volatility jumped from 15% to 38% and daily ETH volatility surged from 41% to 70%. The analysts said macro-driven jitters appeared strong after a recent jolt from the hotter-than-expected Producer Price Index. He notes volatility spikes likely stem from traders rushing for protection before the U.S. GDP data release on Aug. 28 and jobs data in early September.

Activity in options markets mirrored that caution. The 25-delta skew, a sentiment gauge, turned negative for both BTC and ETH, signaling stronger demand for puts. Dawson said the tilt in options pricing and positioning is the “strongest demand for downside protection we’ve seen in two weeks.” Derive’s market odds also shifted toward a retest of $100,000 for bitcoin and $4,000 for ether by late September.

Under the surface, leverage resets but not uniformly. Glassnode tracked a modest 2.6% decline worth nearly $2 billion in BTC aggregate futures open interest . There’s also been a 29% jump in long-side funding payments from $2.8 million to $3.6 million, a higher level than usual. This could prove an unstable mix if momentum falters, analysts suggested. Additionally, onchain daily active addresses dipped below trend even as transfer volumes spiked on volatility-driven reallocations, another sign of a market led by short-term repositioning rather than organic demand.

BRN’s Head of Research, Timothy Misir, described the market drawdown as a leverage flush into a weakening tape. He flagged 24-hour liquidations possibly approaching $1 billion, and BTC technical indicators that show “fragility” if spot fails to hold around the short-term holder cost basis near $110,000.

Misir also pointed out key price levels near $103,700 and around $100,800 as lines that, if lost, would “jeopardize the bull-cycle market structure.” Even so, he highlighted selective dip-buying from corporate treasuries and Wall Street after the largest weekly crypto fund outflows since March .

Strategy disclosed a new 3,081 BTC purchase for $357 million on Monday, and Tom Lee’s BitMine Immersion grew its digital asset treasury by about $2.2 billion over the past week. The Block also reported $444 million of daily net inflows into spot ETH ETFs , which outperformed BTC products.

The combination of falling prices, higher volatility, and more defensive options positioning comes amid fresh uncertainty over the path of rate cuts. Federal Reserve Chair Jerome Powell struck a dovish tone at last week’s Jackson Hole symposium, but President Donald Trump’s bid to remove Fed Governor Lisa Cook has raised new questions about the central bank’s independence.

Data from the CME FedWatch tool detailed an 84.3% probability of eased funding rates at next month’s Federal Open Market Committee meeting. The likelihood of an interest policy pivot has swung between the mid-80s and mid-90s in recent weeks as traders react to macro cues.