Crypto investors woke up to a rude surprise this Tuesday. Bitcoin (BTC) tumbled to a seven-week low, falling below $110,000. This drop dragged down Ethereum (ETH) and other digital coins, causing a wave of forced sell-offs across the market.
Here’s a quick look at what happened:
- Bitcoin hit its lowest point since July, while Ethereum corrected more than 10% from its recent record high.
- A “bloodbath” hit the crypto market, triggering over $760 million in liquidations.
- The market is now questioning if the Federal Reserve will cut interest rates in September.
- Traders are keeping a close eye on major economic data coming out this week.
Bitcoin, the largest cryptocurrency, was trading around $109,600 at press time. This price point was last seen in January of this year, a time when Donald Trump became U.S. President and the market began a big rally. Looking at the charts, this shows a 1.3% drop in just 24 hours. It also marks an 11.6% fall from Bitcoin’s all-time high of $124,000, which it hit on August 14. This sudden dip wiped out most of the gains made after Federal Reserve Chairman Jerome Powell’s speech last Friday in Jackson Hole. That speech had briefly pushed Bitcoin above $117,000.
Ethereum also took a hit, falling over 10% from its recent all-time high of about $4,950. It was trading around $4,417 at the time of writing, down 3.8% from yesterday’s price. Other big cryptocurrencies didn’t escape the downturn either. Solana (SOL) fell 4.8% to $187, XRP dropped 1.4% to $2.9, and BNB lost 1.6% to reach $840. The overall value of the crypto market has shrunk by 1.9% in the last 24 hours.
Millions in Liquidations Hit Bullish Bets
The digital asset market’s wild swings were made worse by a massive forced selling of leveraged positions. According to data from Coinglass, about $760 million in cryptocurrencies were liquidated in the past 24 hours. Bitcoin and Ethereum bore the brunt of this, with $270 million and $238 million liquidated, respectively. Earlier reports, like one from CoinDesk, suggested total liquidations had reached $900 million during the sharpest losses, before prices saw a small bounce back.
This came as a shock to investors betting on higher prices. Of the total liquidations, $647.65 million were “long” positions (bets that prices would rise). Only $111.40 million were “short” positions (bets that prices would fall). In all, 167,848 individual traders lost money, showing just how big the impact was on the crypto derivatives market.
Dr. Sean Dawson, Head of Research at options exchange Derive.xyz, called the start of the week “bloody” for major cryptocurrencies. He pointed out that Bitcoin’s daily volatility jumped from 15% to 38%, and Ethereum’s from 41% to 70%. Dawson explained that “this seems driven by macroeconomic nerves after the hotter-than-expected producer price index.” He added that traders are looking for safety ahead of key economic data, such as the U.S. GDP report on August 28 and employment figures in September, as reported by The Block.
Macro Uncertainty and Whale Moves
This market pullback comes amid ongoing questions about interest rates. While Fed Chair Powell sounded a bit softer at last week’s Jackson Hole symposium, President Trump’s effort to remove Federal Reserve Governor Lisa Cook has raised new concerns about how independent the central bank truly is.
Analysts like Rachael Lucas from BTC Markets believe the market correction is due to several things. These include traders taking profits, hitting technical resistance levels, and changing expectations about future rate cuts. Adding to this, a “whale” investor sold off 24,000 BTC (worth about $2.6 billion) on Monday, which started a chain reaction of liquidations, according to The Block.
Timothy Misir, Head of Research at BRN, called the drop a “leverage flow in a weakened market.” He warned that if Bitcoin doesn’t hold its support level around $110,000—which is close to what short-term holders paid for their coins—it could fall to $103,700 and then $100,800. Such a drop would put the market’s bullish run at risk. Rick Maeda from Presto Research agreed, noting that Bitcoin has support at $105,000 and $100,000. He sees a ceiling between $118,000 and $120,000 until the bigger economic picture becomes clearer, as reported by The Block.
Despite the gloomy mood, some big players are “buying the dip.” Companies like Strategy announced they bought 3,081 BTC for $357 million. BitMine Immersion also grew its treasury by $2.2 billion. U.S. spot Ethereum exchange-traded funds (ETFs) saw daily net inflows of $444 million, actually outperforming Bitcoin ETFs. However, CoinShares reported that $1.43 billion left crypto investment products last week. This suggests that institutional investors are becoming more cautious and shying away from risk.
Bitcoin: More Corrections or a Bull Run?
Leo Zhao, Chief Investment Officer at MEXC, thinks Bitcoin might stay between $110,000 and $120,000 for a while. Without new major economic news, it could also fall to $105,000-$100,000, CoinDesk reported. For Ethereum, most experts still feel positive in the long run. But its fall from a record high shows that simply more companies using it might not be enough to keep its price climbing steadily.
The market is now focused on the release of important economic data this week. September has historically been a tough month for cryptocurrencies. Investors are staying careful, expecting more potential ups and downs.