Why is Bitcoin and the Crypto Market Dropping Today?

• Bitcoin hit record highs but dropped fast as profit-taking and wallet moves drove heavy selling.
• Nearly $500 million liquidated across traders in one day, mostly long positions crushed by drop.

Bitcoin saw a sharp reversal on Tuesday after briefly touching a new all-time high of $123,091. The price fell by 4.73% to $116,800 within 24 hours as short-term traders began locking in profits. The decline marked a moment of pause in what has been a strong rally throughout July.

Ethereum also cooled off, falling 1.79% to $2,975. Solana dropped by 4.32%, Dogecoin lost 7.11%, Cardano declined 3.88%, and Stellar declined by 5.39%. Analysts indicated that the pullback was part of broader consolidation after a strong upward move.

CoinSwitch Markets Desk reported that Bitcoin’s recent rise had been driven by institutional buying. July alone recorded ETF inflows worth $3.4 billion, of which $2.2 billion came in just two days. However, the trend slowed after Monday’s outflows totaling nearly $100 million.

Dormant Bitcoin Wallet Activity Adds Pressure

Lookonchain data showed that a dormant Bitcoin wallet containing 80,009 BTC, valued at about $9.46 billion, sent 7,843 BTC (around $927 million) to Galaxy Digital. Altogether, 16,843 BTC worth close to $2 billion has left the wallet. On Tuesday, Galaxy Digital transferred 2,000 BTC, valued at $236 million, to Binance and Bybit, which increased the available supply on exchanges.

This Bitcoin OG with 80,009 $BTC($9.46B) transferred another 7,843 $BTC($927M) to #GalaxyDigital, for a total of 16,843 $BTC ($2B).

Galaxy Digital is depositing $BTC to exchanges, and 2,000 $BTC($236M) has been directly deposited to #Bybit and #Binance.https://t.co/Sm9UBYboIN pic.twitter.com/rwxHtrV0DQ

— Lookonchain (@lookonchain) July 15, 2025

These actions added pressure on the market. CoinGlass Liquidation Map reported forced sales involving 130,735 traders within a single day. The total amount liquidated reached about $500 million. Of that, 78% were long positions, showing that the majority had expected prices to rise, but were caught off guard.

However, Edul Patel, Co-Founder and CEO of Mudrex, emphasized broader strength. He said, 

“Bitcoin exchange inflows have dropped to their lowest levels since April 2015, indicating reduced selling pressure. The bullish structure remains intact despite the short-term dip.”

Traders Eye Inflation Data and Geopolitics

Traders have been paying close attention to next week’s U.S. inflation report. The Consumer Price Index is due to increase 2.6% year-on-year. A lower rate than forecast could lift cryptocurrency prices because it would reduce pressure on the Federal Reserve to keep interest rates high, something that often benefits riskier assets.

Political news is also affecting sentiment. U.S. President Donald Trump’s revelation of a 100% tariff on Russian imports triggered a cautious market response. This helped fuel the retreat in crypto trading, with investors stepping back momentarily in indecision.

Srinivas L, 9Point Capital CEO, said,

“Following the breakout, Bitcoin is expected to consolidate at elevated levels. Pullbacks should be seen as buying opportunities. Momentum and fundamentals both support a sustained bullish outlook from here.”

The overall crypto market is stable. Avinash Shekhar, Pi42 Co-founder & CEO, stated,

“Despite the dip, institutional interest remains strong, and on-chain indicators suggest the broader uptrend is intact.”