On August 14, Bitcoin and leading altcoins saw a significant fall that erased the value of the crypto market by $ 860 million. Bitcoin declined by 5%, but it remained above the day's highs, which stood at $123,500 to about $117,000. Heightened leveraged long positions held by retail and institutional traders had attracted an extended uptrend, which was forced downward as the general correction eventually took place.
The pullback in the market occurred on new concerns about inflation, after they released data that surpassed analyst expectations. Inflationary pressure reignited the concern about the direction of interest rates by the U.S. Federal Reserve, a decision that has encouraged investors to minimize their risk exposures to cryptocurrencies. Analysts attributed the correction to profit-taking and macroeconomic caution that reversed recent bullish momentum.
Ethereum experienced one of the highest losses during the sell-off. The liquidation of ETH positions led to traders losing $348.9 million. The most notable individual liquidation was on an ETH-USDT perpetual swap worth 6.25 million dollars on the OKX exchange, demonstrating the severity of leveraged trading in volatile conditions. XRP and Dogecoin were no exception, and they have been recording losses as well.
The total crypto market capitalization fell to 3.9 trillion dollars, which is 4.2 trillion compared to the previous week. Institutional inflows notably weakened due to investors' re-evaluation of the market environment concerning inflation data and surging yields. The overall market volume was stable and represented interest rather than liquidations, which crystallised in reduced interest in the long positions.
The market has dipped, but analysts still discuss long-term growth drivers. The growing adoption of Blockchain applications, regulatory framework updates, and the influx of institutional involvement suggest that crypto is on a long-term bullish trend. Nick Ruck, Director at LVRG Research, thinks that recent events did not affect the fundamental nature of the market.
Market participants now await US labor data in early September, which will indicate how monetary policies will be further directed. Investors are also monitoring the Federal Reserve's behaviour in coping with inflationary pressures carefully, as predictions regarding further rate action may impact the performance of crypto assets.
Also read: Ethereum News Today: Ethereum Whale Transfer of $10M to Kraken Sparks Fears of Market Volatility