Bitcoin (BTC) saw a sharp pullback on Tuesday, retreating from record highs above $126,000 amid warnings that the recent crypto rally may be temporarily overheated. BTC fell below $122,000, erasing gains from the past three days and trading 2.4% lower in 24 hours.
The selloff extended across altcoins, with XRP ($2.86), DOGE ($0.25), ADA ($0.82), and AVAX ($28.38) dropping between 5% and 7%.
Despite a 31% year-to-date gain, Bitcoin has repeatedly faced swift reversals after reaching new highs. Previous surges—$109,000 in January, $123,000 in July, and $120,000 in August—were followed by 10%-15% pullbacks within days. The latest retreat comes after a near-vertical 16% rally from late September lows below $109,000.
Market Outlook
Jean-David Péquignot, CCO of Deribit, expects BTC could revisit the $118,000–$120,000 range, shaking out traders who joined the rally late. He added that such a pullback could present a buying opportunity, potentially paving the way for Bitcoin to move above $130,000 by the end of the year.
Vetle Lunde, head of research at K33, highlighted that ETF and derivatives inflows reached a yearly peak last week, with 63,083 BTC (~$7.7B) added across U.S. ETFs, CME, and perpetual futures. “Historically, such surges in exposure often align with local tops,” he said, pointing to the elevated risk of short-term consolidation.
Macro Environment
Federal Reserve Governor Stephen Miran indicated Tuesday that the neutral interest rate may now be 0.5%, citing tighter immigration policies and evolving fiscal pressures. Miran noted that U.S. growth in the first half of 2025 was weaker than expected, but he expects a steadier pace of growth as policy uncertainty clears. With a partial government shutdown limiting key economic data, the Fed’s upcoming decisions on potential rate cuts remain closely watched.
Impact on Crypto Stocks and Miners
The market downturn also affected crypto-related equities. MicroStrategy (MSTR) fell 7%, Coinbase (COIN) dropped 4%, while Ether-linked firms Bitmine Immersion (BMNR) and Sharplink Gaming (SBET) lost 3% and 7%, respectively. Bitcoin miners were mostly lower, with MARA Holdings down 4%, Riot Platforms (RIOT) off 3%, and Hut 8 (HUT) declining 2%.
Overall, the market’s pullback underscores the volatile nature of crypto rallies, as heavy inflows and elevated positioning create the potential for short-term corrections before upward momentum resumes.
