Bitcoin loses key support at $115,800 as altcoin traders capitulate, signaling fading risk appetite

Investors’ appetite for risk seems to weaken as Bitcoin (BTC) signals weakness and altcoin traders capitulate.

According to the latest edition of the Bitfinex Alpha report, BTC slipped below its three-week range floor near $115,800 late last week. On August 5, BTC tagged $112,722.10 in early trading hours, while also flipping former support into potential resistance. 

The breakdown follows weeks of weakening order flow and open interest that showed traders rotating into Ethereum (ETH) and higher-beta names. That rotation unwound abruptly, as the aggregate of altcoins outside the top 10 fell 16.3% between July 28 and August 2, erasing roughly $40 billion in value before a modest bounce.

De-risking moves

The synchronous drawdown across majors and the long tail point to a market-wide de-risking rather than a simple shift in leadership. From its all-time high of $123,054, BTC is down 6.6%. ETH is 9% off its recent local peak and closed last week 9.7% lower. 

At the same time, the broader altcoin complex fared worse, starting the week with a slight pump to nearly $994 billion, but erasing the gains as of press time. 

Despite the crashes registered last week, ENA and PENGU remained two outliers with 14% and 8.4% weekly price increases, respectively.

However, even the outliers are bleeding at the start of this week. ENA is down by 4.1% in the past 24 hours, while PENGU tanks a 7.6% correction.

The report noted that leverage amplified the correction move. On August 2, liquidations across major centralized venues topped $1 billion, with more than $922 million in longs wiped out as momentum stalled. 

While BTC led the pain, ETH long liquidations comprised most of the remainder, evidence that traders had crowded into catch-up bets after ETH underperformed earlier in the cycle.

Furthermore, the report characterized liquidation flush as a “cleansing” event that typically resets open interest and positioning. Yet, it warned that the market remains in a reflexive, fragile phase where sharp reversals and liquidation cascades are more likely.

Bitcoin remains strong

Structurally, Bitcoin continues to diverge from the rest of crypto. Its market capitalization remains above $2.2 trillion, nearly double the 2021 cycle peak, while ETH and the aggregate altcoin market have yet to exceed their 2021 highs. 

The report argued that this reflects BTC’s evolution into a more macro-resilient, institutional-grade asset, contrasted with an altcoin sector that still lacks sustained capital rotation and durable, structural demand.

As of now, Bitcoin executed the tactical bounce fueled by oversold conditions predicted by the report, recovering the $114,000 threshold after dipping below it.

However, without evidence of aggressive spot buying, renewed exchange-traded fund (ETF) inflows, and with a still-hawkish Federal Reserve backdrop, the expectation remains around a consolidation or further corrective price action.

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