The cryptocurrency market faced a sharp downturn at the start of August, with its total market capitalization shrinking by 6,6% to $3,8 billones. This broad sell-off was primarily driven by escalating macroeconomic tensions, prompting a significant liquidation event across major digital assets.
Bitcoin (BTC), the market leader, saw its value drop by 2,4% to $115.354,00. Ethereum (ETH) followed suit with a 4,1% decline, landing at $3.702,00. Other prominent altcoins, including Solana (SOL) and XRP (XRP), experienced drops of approximately 5%, contributing to the overall market depreciation. This widespread decline pushed the Crypto Fear and Greed Index down by 6 points, now registering at 75, indicating a shift in investor sentiment.
The market turmoil was underscored by a massive liquidation wave, with over $629 millones in cryptocurrency holdings wiped out within a single day—a 45% increase from the previous day’s figures, according to Coinglass data. Technical indicators also weakened, as the average crypto market Relative Strength Index fell to 35,4, signaling a loss of momentum across key tokens. Furthermore, the market’s overall open interest saw a 3% reduction, settling at $193 billones.
Tariffs and Fed Outlook Spark Retreat Across Crypto Assets
A significant catalyst for this market retreat stems from renewed macroeconomic pressures. Investors are now anticipating a prolonged period of elevated interest rates, a sentiment reinforced by robust U.S. economic data. This adjustment in interest rate expectations has led to a reduced appetite for riskier assets like cryptocurrencies, as capital flows towards safer alternatives, such as government bonds.
Adding to the global economic headwinds are new U.S. tariffs, which took effect on August 1. The White House announced a 25% tariff on goods from India and a substantial 50% tariff on critical materials such as copper. These tariffs are expected to disrupt global supply chains, particularly impacting industries vital to crypto mining and hardware manufacturing. The U.S. Trade Office estimates that these new tariffs, also targeting countries like Brazil, South Korea, and South Africa, could inflate short-term consumer prices by 2,1–3%, fostering a more risk-averse market environment. President Donald Trump confirmed these new penalties, which affect billions in annual trade.
On-Chain Activities Fuel Market Unease
Beyond macroeconomic factors, specific on-chain activities further contributed to market anxieties. On July 31, a notable event occurred: five Bitcoin miner wallets, dormant since April 2010—over 15 years—transferred 250 BTC, valued at nearly $30 millones, to two new addresses. Such movements from long-untouched “legacy” wallets are rare and often interpreted as potential indicators of market shifts. This follows a month of heightened activity from long-term holders, with billion-dollar wallet movements raising concerns about future selling pressure.
Simultaneously, short-term Bitcoin holders appear to be capitulating. Market analyst Darkfost reported on July 30 that many recent buyers are now selling at a loss. Exchange data revealed that over 50.000 BTC were in the red by July 15, with more than 37.000 BTC still underwater as of July 25. Adding to this, CryptoQuant analyst Maartunn observed a shift in Bitcoin supply from long-term to short-term holders, with over 223.000 BTC moving into short-term wallets in the past month, likely indicative of profit-taking or a repositioning of investor assets.
The convergence of these macroeconomic pressures and on-chain movements paints a clear picture of the forces currently impacting the cryptocurrency market, leading to a period of heightened volatility and price corrections.
Disclaimer: This article is for informational purposes only and should not be taken as financial advice. Always conduct thorough research before making investment decisions.
You might be interested in:
