Bitcoin has fallen to its lowest level in nearly seven weeks as the cryptocurrency continues to retreat from the record highs reached in mid-August. Market data shows that the world's largest cryptocurrency dropped to $108,719 during early Asian trading on Tuesday, though it has since recovered some ground while still breaking below its 100-day moving average.

This decline comes as Ethereum emerges as the new favorite among digital asset traders, with the token having just set a new all-time high of $4,955 on Sunday. Despite investors continuing to bet on further gains for the second-largest cryptocurrency, Ethereum has also experienced a modest pullback since the weekend. As of press time, Bitcoin is trading around $110,400, while Ethereum is priced at approximately $4,439.

In August, U.S. Bitcoin exchange-traded funds (ETFs) experienced net redemptions exceeding $1 billion, while Ethereum-related funds attracted $3.3 billion in inflows, serving as a clear signal of capital rotation toward Ethereum. However, holders of both cryptocurrencies are currently facing losses.

"Major cryptocurrencies had a brutal start to the week, with crypto market liquidations exceeding $900 million," said Sean Dawson, Head of Research at Derive.xyz. "Ethereum ($324 million) and Bitcoin ($209 million) dominated the liquidations, with nearly all forced closures being long positions due to the broad selloff."

Derivatives data also indicates rising market caution. Dawson noted that the 25-delta skew indicator, which measures whether traders are paying more for downside protection than upside risk, has turned negative for both cryptocurrencies, indicating that demand for put options is overwhelming call options. He added that traders are preparing for the possibility of Bitcoin testing the $100,000 level and Ethereum challenging the $4,000 threshold.