Bitcoin's Ongoing Slump: Analyzing the Latest Market Selloff and Trading Implications

Bitcoin (BTC) has extended its downward trajectory from Friday, marking a third consecutive week of declines, as highlighted in a recent analysis by QCPgroup on August 4, 2025. The cryptocurrency briefly tested the 112k level, a critical psychological and technical threshold that triggered massive liquidations across the market. According to the report, over $1 billion in leveraged long positions were liquidated since Friday, underscoring the intense pressure on bullish traders. This selloff aligns with a broader risk-off sentiment in global markets, driven by softer-than-expected US jobs data and the announcement of new tariffs, which have heightened economic uncertainty. For traders, this movement represents a stark reminder of BTC's sensitivity to macroeconomic indicators, with the price action revealing key support levels around 112k that could dictate short-term rebounds or further drops.

In terms of concrete trading data, the liquidation event since Friday has been particularly brutal for overleveraged positions, with on-chain metrics showing a spike in forced selling. Trading volumes surged during this period, as BTC/USD pairs on major exchanges saw heightened activity, pushing the 24-hour volume past historical averages for similar downturns. Market indicators like the Relative Strength Index (RSI) likely dipped into oversold territory around the 112k test, signaling potential exhaustion among sellers. For those eyeing trading opportunities, resistance levels now emerge near previous highs, potentially at 120k if a recovery materializes, while support below 112k could open doors to 100k if breached. Cross-market correlations are evident here, with BTC mirroring declines in stock indices like the S&P 500, where risk-off flows from weak jobs numbers—reporting lower-than-forecasted nonfarm payrolls—have prompted investors to unwind positions. Institutional flows, as inferred from recent ETF data, show outflows from Bitcoin-related products, further exacerbating the slump.

Key Trading Pairs and On-Chain Insights for BTC

Delving deeper into trading pairs, BTC/ETH has shown relative weakness, with Ethereum holding up marginally better amid its own ecosystem developments, but still facing downward pressure from the broader crypto market cap contraction. On-chain metrics from sources like Glassnode indicate a rise in exchange inflows during the selloff, peaking around August 2-4, 2025, which often precedes capitulation events. Trading volumes for BTC perpetual futures reached elevated levels, with open interest dropping sharply post-liquidations, suggesting a potential reset for more balanced positioning. For savvy traders, this environment offers spots for contrarian plays, such as monitoring volatility indices like the BVIN, which spiked amid the turmoil, indicating heightened fear that could lead to oversold bounces. Broader implications tie into stock market dynamics, where new tariffs on imports have rattled tech stocks, indirectly affecting AI-related tokens and crypto sentiment, as investors pivot to safe-havens like gold over digital assets.

Looking ahead, the interplay between these factors creates ripe trading scenarios. If US economic data continues to soften, BTC could test lower supports, but any positive catalysts—like dovish Federal Reserve signals—might spark a relief rally. Traders should watch for volume spikes on rebounds, with timestamps from August 4, 2025, showing intraday lows at 112k around Asian trading hours. Overall, this episode highlights the need for risk management, with stop-losses below key levels and attention to funding rates on derivatives platforms. By integrating these insights, investors can navigate the volatility, capitalizing on dips while hedging against further downside tied to global economic shifts.

In summary, Bitcoin's slump to 112k amid $1 billion in liquidations reflects a confluence of macroeconomic pressures, offering traders actionable data on volumes, indicators, and cross-market ties. Staying attuned to real-time developments will be crucial for identifying entry points in this turbulent landscape.