Cryptocurrency markets faced a sharp decline at the start of the week, as mounting macroeconomic concerns triggered more than $500 million in forced liquidations of long positions.
Bitcoin slipped 1.1% to $116,394.87 after hitting a record high of $124,496 last week – its fourth all-time high this year. At one point during trading, Bitcoin fell to a daily low of $114,706. Ethereum also dropped 2.5% to $4,354 after nearing its record of around $4,800 last week. The decline came after July’s producer inflation data came in hotter than expected, raising doubts over a Federal Reserve rate cut in September.
Profit-taking drove broad market liquidations. According to CoinGlass data, 123,836 traders were liquidated over the past 24 hours for a total of $530.79 million, including about $124 million in Bitcoin longs and $184 million in Ether. Such liquidations occur when traders are forced to sell assets at market price to cover debts, exerting further downward pressure.
Investor sentiment was further dampened by Treasury Secretary Scott Bessent, who clarified Thursday that President Donald Trump’s Bitcoin strategic reserve announced in March would be limited to government-seized coins, as part of a “fiscally neutral” approach to expanding holdings.
Major cryptocurrencies fell alongside blue-chip tokens, with the CoinDesk 20 index, which tracks the broader market, down 1.2%. Crypto-linked stocks also declined, with Bitmine Immersion down 5.4% and Bullish, which went public last week, sliding 8.9%. Coinbase gained 1.0% while Galaxy Digital rose 2.2%.
Focus on Jackson Hole
Investors this week await the Federal Reserve’s annual economic symposium in Jackson Hole, Wyoming, for clues on upcoming monetary policy decisions. Crypto traders also look to Thursday’s jobless claims data.
Last week’s record tests for Bitcoin and Ether surprised traders who had expected seasonal weakness in August, seeing macro concerns overshadow institutional adoption momentum until the Fed’s September meeting. Still, many view the pullback as more strategic than alarming, supported by ongoing demand from ETFs and companies steadily buying Bitcoin and Ether.
Despite net outflows from Bitcoin and Ethereum ETFs on Friday, the week ended with $547 million in net inflows for Bitcoin and a record $2.9 billion for Ethereum – marking Ether’s 14th consecutive week of inflows. Bitcoin remains little changed month-to-date, while Ether is up 15%.
Geopolitics and Fed Policy Add Pressure
Political uncertainty has also weighed on sentiment, as markets reacted to Monday’s White House summit where President Trump met Ukrainian President Volodymyr Zelensky and European leaders to discuss peace efforts.
Trump hinted at potential direct talks with both Moscow and Kyiv, and even a possible trilateral summit, while Zelensky expressed cautious optimism without concrete outcomes. The lingering geopolitical risks added pressure on high-risk assets such as cryptocurrencies.
Attention also turns to Fed Chair Jerome Powell’s speech Friday in Jackson Hole. With expectations for a larger September rate cut fading, markets now price in an 83% chance of a 25 basis-point cut, down from bets on a more aggressive move.
Companies Buy the Dip
Despite Tuesday’s drop below $115,000 – nearly 6% off the recent record – treasury firms such as Metaplanet and Strategy added a combined 1,185 Bitcoin Monday, taking advantage of lower prices.
According to QCP Capital, implied volatility remains relatively low, suggesting markets do not expect a major price breakout. Analysts said: “Range-bound trading is likely to persist, with dips near $112,000 attracting buyers and rallies toward $120,000 meeting selling pressure – at least until Powell’s speech Friday.”
CryptoQuant data on long-term holder (LTH) profitability show current levels remain positive yet moderate, with profits below peaks from 2017, 2018–2019, and 2022–2023 cycles. This suggests Bitcoin trades near historic highs but with manageable selling pressure, leaving room for further upside.
Outlook: Momentum Indicators Show Weakness
Bitcoin peaked at $124,474 last Thursday but quickly lost momentum, sliding 4% the same day to settle around $117,300 over the weekend. On Monday it extended losses to close below $116,300. As of Tuesday, it continued lower, breaking the uptrend line established since early April.
If Bitcoin closes below the 50-day exponential moving average (EMA) at $115,046 and the daily uptrend line, losses could extend toward the next support at $111,980.
On the daily chart, the Relative Strength Index (RSI) stands at 44, below the neutral 50, reflecting bearish momentum. The MACD also flashed a negative crossover Sunday, sending a sell signal suggesting further downside.
However, if Bitcoin finds support near the EMA at $115,046 and closes above $116,000, chances for recovery toward the key $120,000 level could improve.
