This year, Bitcoin prices have been heavily influenced by declines in the broader economy and the fallout of major players like FTX and Terra.
The crypto market saw a downturn at the start of the week, driven by economic apprehensions that led to the liquidation of long positions valued at over $500 million.
Bitcoin fell 2% to $115,255.70, after reaching a recent peak of $124,496, which was actually its fourth all-time high this year. It dipped as low as $114,706 at one point. Meanwhile, Ethereum also saw a decline, slipping 4% to $4,283.15, trailing close to its nearly $4,800 record. Both cryptocurrencies were negatively affected following inflation data that cast doubt on the Federal Reserve’s plans for rate cuts in September.
This profit-taking has triggered a broader wave of liquidations in the crypto realm.
According to Coin Metrics, in the past 24 hours, over 131,000 traders faced losses amounting to $552.58 million, which included about $123 million in Bitcoin and $178 million in Ethereum liquidations. This occurs as traders are compelled to sell their holdings at market prices to cover their debts, thus driving prices lower.
In light of investor disappointment, comments from Treasury Secretary Scott Bescent regarding a Bitcoin reserve established under Donald Trump in March have stirred some discussions. The intent there seems to be exploring budget-neutral methods to acquire more Bitcoin.
The leading cryptocurrency fell in tandem with other major coins, while the Coindesk 20 index, a measure of the overall crypto market, dropped 3.7%. Stocks associated with the crypto sector also suffered, with Ether Treasury’s shares notably declining. Bitmine Immersion experienced a 6% drop, while Sharplink Games fell by 3%. Notably, Strong, a cryptocurrency exchange that went public recently, also saw a decrease of 3%.
Investors are keeping a keen eye on the upcoming Federal Reserve’s Annual Economic Symposium in Jackson Hole, Wyoming, seeking clues about future central bank policies. Jobless claims data set to release on Thursday will also be closely monitored by crypto traders.
Last week’s fluctuations in Bitcoin and Ethereum surprised many market participants who were anticipating a downturn in August. Macro concerns seem poised to overshadow recent positive momentum in institutional and corporate interest in crypto, particularly as many markets traditionally witness weaker trading months.
Some analysts consider this pullback a strategic cooldown rather than a reaction to a crisis. They highlight ongoing support from firms that are aggressively accumulating crypto ETFs, Bitcoin, and Ethereum. The ETF tracking Bitcoin and Ethereum prices recently saw net outflows on Friday but still recorded significant weekly inflows—$547 million and $2.9 billion, respectively. For Ethereum, this marked a record weekly inflow and marked the 14th consecutive week of such gains.
