Bitcoin suffered its third consecutive Friday selloff, with prices briefly testing the $112k support level and triggering over $1 billion in liquidated leveraged longs across the crypto market since Friday. The sharp downturn came against a backdrop of risk-off sentiment in traditional markets, driven by a confluence of factors: a weaker than expected US jobs report and a fresh round of tariffs from Washington. The result was a broad selloff in equities and crypto alike, as investors recalibrated expectations around global growth and liquidity.

For those hoping that altcoin season was near, Friday’s move served as a reality check. SOL tumbled close to 20% on the week, while ETH fell nearly 10%. Even ETF flows failed to offer a floor. Friday recorded the second-largest outflow for BTC spot ETFs, and the fourth-largest for ETH, dimming hopes that institutional flows would provide near-term support.

Time to Buy the Dip?

Still, despite the pullback, the broader structural setup remains intact. BTC’s July monthly close marked its highest in history, and the recent drawdown appears more corrective than capitulatory. Historically, such post-rally shakeouts, particularly those that flush out excess leverage, have laid the groundwork for renewed accumulation.

Importantly, this comes at a time when macro and structural tailwinds remain supportive. Clarity on regulatory frameworks, accelerating stablecoin integration and institutional tokenization initiatives are all strengthening crypto’s long-term thesis.

In the options market, sentiment appears more opportunistic than defensive. Last night saw significant interest in BTC 29AUG25 call flys at $118k/$124k/$126k, reflecting tactical positioning for a rebound with a max payoff at $124k, notably above prior all-time highs. While front-end put skew remains elevated, it hasn’t yet reached levels indicative of broad panic, and could normalize if spot reclaims the $115k handle.

We remain cautiously optimistic. Spot levels near $112k warrant vigilance, especially amid persistent macro uncertainty. But signs of stabilization, such as renewed spot ETF inflows, declining implied vols and a narrowing of skew, would be constructive signals that institutional sentiment is recovering.

Tonight’s ETF data could offer an early indication. If inflows resume and vol metrics begin to compress, it would provide stronger evidence that current conditions may support a buy-the-dip narrative.

ETH is on a tear, inching towards the $4k mark for the first time since December last year. Momentum continues to build behind the ETH narrative as spot ETH ETF inflows continue to outpace BTC for seven consecutive days. With ETH’s market capitalisation still just one-fifth of BTC’s, it takes far less institutional and Corporate Treasury capital to move the needle.

While ETH may have dominated headlines in recent weeks, BTC has remained quietly resilient. Despite a deceleration in spot BTC ETF inflows, price action has held firm. Even Friday’s sale of 80,000 BTC by a long-time holder was absorbed relatively well by the market as traders were quick to buy the dip and fade the brief spike in vols.

BTC dominance remains anchored around 60%, barely budging over the past week; signalling a sustained conviction in BTC as a store-of-value asset, rather than wholesale rotation into alts. This also implies further room for ETH and other majors to gain market share. For context, during ETH’s all-time high in November 2021, BTC dominance stood below 45% while ETH’s was near 20%.

Still, positioning looks relatively stretched in the near term. Perpetual Open Interest sits near 1-year highs at $45 billion for BTC and $28 billion for ETH. Perp Funding rates are also above 15% across major exchanges. While not yet at levels that scream capitulation, it wouldn’t take much to trigger a cascade similar to last Friday. Notably, some large players have already taken profit on their bullish positions, including the unwind of a sizeable ETH 26SEP25 3.6k/4k/4.2k Call Fly. Around the same time, BTC 8AUG25 110k Puts were also bought up in size as a hedge against near-term downside.

Options flows and flattened risk reversals across front-end tenors point to markets expecting some profit-taking around the $4k and $120k region in ETH and BTC respectively. Yet with momentum, narrative strength, and macro tailwinds on our side, it's likely that hodlers and institutions will continue to buy the dip, similar to what we saw on Friday.