Bitcoin slipped below $112,000 on Tuesday as institutional money reversed course and investor sentiment cooled. The largest cryptocurrency tested the $112,500 support level amid mounting concerns about weakening demand and geopolitical tensions.
U.S. spot Bitcoin exchange-traded funds recorded $326.5 million in outflows on Oct. 13, according to SoSoValue data. The sharp reversal follows yearly highs in institutional inflows just one week earlier, signaling deteriorating confidence among traditional finance participants.
Ethereum declined approximately 4.5% to trade below $4,000 as the broader cryptocurrency market shed 4.4% in capitalization. Total market value dropped to $3.85 trillion with elevated trading volumes indicating continued volatility ahead. Bitcoin traded around $110,800, down 3.4% from prior levels.
CryptoQuant analyst Maarten Regterschot noted the short-term holder realized price has been tested four times in six weeks. This metric represents the average cost basis for new market participants and typically provides support during bull phases, though repeated tests suggest weakening buyer interest.
Renewed friction between Washington and Beijing compounded market fragility. China's Commerce Ministry pledged to fight U.S. trade measures, shifting attention back to the tariff dispute that triggered nearly $20 billion in forced liquidations last week. President Donald Trump imposed 100% tariffs on Chinese imports over rare earth mineral restrictions.
Combined Bitcoin and Ethereum ETF outflows reached $755 million on Tuesday, The Block reported. BRN research head Timothy Misir said redemptions accelerated alongside declining open interest, indicating leverage has retreated as gold hit fresh highs and equities rebounded.
Options data revealed defensive positioning among traders. Nick Forster from Derive noted heavy buying of $115,000 and $95,000 put options for Oct. 31 expiry, while call selling dominated at the $125,000 strike. The setup suggests fresh institutional demand will determine near-term direction.
Regterschot warned that breaking below $112,500 could send Bitcoin toward $103,500. During 2025's bull run, prices found support roughly 10% below short-term holder cost basis. Whether the current market structure holds depends on geopolitical developments and renewed capital inflows.