Crypto Market Tumbles Amid Macro Concerns: Bitcoin, Ether Fall After July Inflation Data & Fed Rate Cut Questions
The cryptocurrency market experienced a downturn at the start of the week, with over $500 million in forced liquidation of long positions due to escalating macroeconomic concerns.
As of now, the price of Bitcoin stands at a 2% decrease, reaching $115,255.70 after setting a new high last week—the fourth such peak this year, at $124,496. The digital currency briefly dipped to $114,706 before recovery. Ethereum, on the other hand, has dropped by 4% to $4,283.15, approaching its previous record of approximately $4,800 last week. Both coins have since corrected following the release of higher-than-anticipated July consumer price index data, raising doubts about a potential Federal Reserve interest rate reduction in September.
The increased selling pressure led to widespread liquidations across the cryptocurrency market. Over the past 24 hours, sales totaling $552.58 million were recorded from 131,455 traders, with $123 million in long Bitcoin liquidations and $178 million in long Ethereum liquidations. This occurs when traders are compelled to sell their assets at current market prices to settle outstanding debts, causing prices to drop.
Further disappointing investors were remarks from Treasury Secretary Scott Bessent, who clarified on Thursday that the strategic bitcoin reserve established by President Donald Trump in March will only consist of Bitcoin seized by the federal government as they explore “budget-neutral pathways to acquire more Bitcoin.”
Top cryptocurrencies by market cap followed the downward trend along with blue-chip coins. The CoinDesk 20 index, a broad measure of the crypto market, declined by 3.7%. Pre-market, crypto-related stocks faced pressure, with ether treasury stocks leading the decline. Bitmine Immersion saw a 6% drop and SharpLink Gaming fell by 3%. Bullish, a newly listed cryptocurrency exchange, also experienced a decrease of 3%.
Investors are focusing on this week’s Fed’s annual economic symposium in Jackson Hole, Wyoming for indications regarding the remaining policy meetings for the year. Crypto traders will also be monitoring Thursday’s jobless claims data.
Last week’s test of Bitcoin and Ethereum highs took traders by surprise as they anticipated an August correction for cryptocurrencies. The focus on institutional and corporate adoption, which has been growing recently, was expected to take a backseat due to escalating macroeconomic concerns, particularly during a traditionally weak trading month for many markets, until the September Fed meeting.
Many view this month’s pullbacks as strategic cool-downs rather than crisis reactions, thanks largely to support from crypto ETFs and companies aggressively accumulating Bitcoin and Ethereum. Although ETFs tracking the price of Bitcoin and Ethereum recorded net outflows on Friday, they reported net inflows of $547 million and $2.9 billion, respectively, for the week. For Ethereum funds, it was a record week of inflows as well as their 14th consecutive week of inflows.