Bitcoin pullback is a short-term price reset after a leveraged long liquidation event that removed speculative holders and tested support near $110.8K; long-term holders remain intact, suggesting the move is a shakeout rather than a structural breakdown.
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Long liquidation dominance spiked to 18%, wiping out overleveraged longs.
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Short-term sellers (1–3 months) faced average unrealized losses ~3.5%, reducing overhead supply.
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Holding above $110.8K—the 1–3 month Average Cost Basis—would likely confirm a healthy reset.
Bitcoin pullback: BTC shakeout tests $110.8K support — read key levels, on-chain data, and what traders should watch next.
What caused the Bitcoin pullback?
The Bitcoin pullback was triggered by a rapid long deleveraging event on August 24th that forced liquidations, spiking Long Liquidation Dominance to 18%. Overleveraged positions were cleared, pushing short-term holders to sell and testing critical support at $110.8K.
How severe was the liquidity flush?
On-chain trackers reported a concentrated long liquidation episode that exceeded April’s tariff-driven drop in magnitude. Data from CryptoQuant indicated Long Liquidation Dominance at 18%, the highest in recent months.
This magnitude suggests the event preferentially impacted highly leveraged retail and momentum traders rather than established holders.
Why does this shakeout matter?
The shakeout matters because it shifts coins from weak hands to more resilient holders, lowering overhead supply and improving market structure.
Short-term holders aged 1–3 months saw average unrealized losses near 3.5% and reduced supply, while the broader 1–6 month cohort remained profitable with average gains of ~4.5% (Glassnode, CryptoQuant reported data).
| Cohort | Average P/L | Implication |
|---|---|---|
| 1–3 month holders | -3.5% (Unrealized Loss) | Fresh investors trimmed positions |
| 1–6 month holders | +4.5% (Average Gain) | Remained largely intact |
| Long Liquidation Dominance | 18% | Significant long clearing |
How likely is Bitcoin to recover from this pullback?
Recovery depends on whether BTC holds the $110.8K level, identified as the Average Cost Basis for 1–3 month holders by Glassnode. Holding this level would indicate the sell-off was a healthy reset; losing it increases the chance of a deeper correction.
Market resilience is bolstered by long-term holders and reduced speculative open interest, but short-term momentum will govern near-term price action.
What should traders watch next?
- Support test: $110.8K — key to confirming a reset.
- Liquidation metrics: Reversals in Long Liquidation Dominance toward normal levels.
- On-chain supply: Reduction in coins held by sub-1 month wallets signals cleanup of weak hands.
Flash crash data and sources
On-chain indicator snapshots referenced: CryptoQuant reported the liquidation spike; Glassnode identified the $110.8K Average Cost Basis for 1–3 month holders. These are mentioned as sources in plain text (CryptoQuant, Glassnode).
The flash crash on August 24th cleared speculative leverage and left market structure that could support a more sustainable rebound, provided key support holds.
Bitcoin’s sharp pullback has flushed out newer investors, but LTHs remain strong as the market tests key support. Holding above $110.8K could confirm this as a healthy reset and not a full breakdown.
Bitcoin’s [BTC] latest pullback has shaken out fresh investors, but veteran holders aren’t flinching.
After a sharper washout than April’s tariff-driven drop, the market is testing whether it can reset on firmer ground. At press time, BTC held just above $110K, matching the Average Cost Basis for 1–3 month holders.
It’s a key level to watch. Keeping it could steady sentiment, but losing it has opened the doors to deeper correction before.
Flash crash cleared the decks
The flash crash on the 24th of August turned out to be an even bigger long-deleveraging event than April’s tariff-driven slump.
Data showed Long Liquidation Dominance spiking to 18%, the highest in months, as overleveraged longs were wiped out.
Source: CryptoQuant
This aggressive clearing of leverage often resets the market, leaving room for a healthier bounce. With speculative excess reduced, Bitcoin may find a firmer footing.
But whether it can sustain momentum depends on holding key support levels in the days ahead.
Why does this shakeout matter?
What we’re seeing now looks like a classic market cleanse.
On-chain data showed the pain being centered on Bitcoin’s newest investors.
Those holding coins for less than a month are sitting on an average Unrealized Loss of 3.5%, and many have already sold, driving a clear drop in supply from this group.
Source: CryptoQuant
But zoom out, and the picture shifts.
Source: CryptoQuant
The broader Short-Term Holder (STH) group, aged 1–6 months, stayed profitable, with average gains of 4.5%. Their resilience suggested only “tourist” buyers were being flushed out.
According to a report on CryptoQuant, this is a bullish reset: coins are moving from fearful sellers to more resilient hands, lowering overhead supply and setting up stronger support.
Source: Glassnode
The key level to watch is $110.8K which is the Average Cost Basis of 1–3 month holders, per Glassnode. Holding above it could stabilize the market and confirm this reset as healthy.
Lose it, and history shows Bitcoin could face deeper, drawn-out corrections.
For now, this looks like a shakeout, not a breakdown.
Frequently Asked Questions
Is the Bitcoin pullback a market breakdown?
The pullback appears to be a corrective shakeout, not a structural breakdown. Long-term holder behavior and reduced speculative open interest indicate the market cleaned excess leverage and may now form firmer support.
How do on-chain metrics show who sold?
On-chain metrics indicate most selling came from sub-1 month holders and leveraged long positions, while the 1–6 month cohort remained profitable. Data sources include CryptoQuant and Glassnode (mentioned in plain text).
Key Takeaways
- Leverage cleared: A long-liquidation event (18% dominance) removed speculative exposure.
- Support to watch: $110.8K is the critical Average Cost Basis for 1–3 month holders.
- Outcome: If support holds, the pullback functions as a bullish reset; if it fails, broader correction risk rises.
Conclusion
COINOTAG reporting: The recent Bitcoin pullback served as a leverage purge that disproportionately affected newer investors. With long-term holders steady and key on-chain metrics improving, the market may stabilize if BTC holds $110.8K. Monitor liquidation metrics and short-term supply for the next directional clues.
