Bitcoin (BTC) experienced a significant price correction on Tuesday, retreating from record highs above $126,000 to trade below $122,000 as market analysts identified signs of overheating in the cryptocurrency rally. The leading cryptocurrency dropped 2.4% over 24 hours, erasing gains from the previous three trading sessions.
The selling pressure extended across the digital asset market, with major altcoins including XRP (XRP), Dogecoin (DOGE), Cardano (ADA), and Avalanche (AVAX) declining 5-7% during the same period. This pattern mirrors previous market behavior where Bitcoin's record highs have typically been followed by rapid corrections.
According to Deribit CCO Jean-David Péquignot, BTC could potentially retest the $118,000-$120,000 support zone, which would represent a buying opportunity for investors. Technical analysis and macroeconomic factors suggest Bitcoin could ultimately surpass $130,000 in the final quarter of 2025.
K33 Research Head Vetle Lunde highlighted concerning derivatives market activity, noting that the past week witnessed the strongest BTC accumulation of 2025. Approximately 63,083 BTC ($7.7 billion) flowed into US ETFs, CME products, and perpetual futures, exceeding May's peak levels. This surge in long positioning without clear macroeconomic catalysts created conditions for the current pullback.
Federal Reserve developments also influenced market sentiment, with Governor Stephen Miran revising his neutral rate estimate to 0.5% amid changing economic conditions including tighter immigration policies and federal deficit concerns.
The crypto market correction impacted related equities, with MicroStrategy (MSTR) falling 7% and Coinbase (COIN) declining 4%. Bitcoin mining companies including MARA Holdings and Riot Platforms also traded lower amid the broader market downturn.