Why $BTC Dropped to $114,000: Key Drivers Behind the August 1st Decline
1. New U.S. Tariffs Trigger Risk-Off Sentiment:
The Trump administration announced a 10% global tariff on a wide range of imports—rising to 35% on goods from Canada. This sudden protectionist move raised concerns over global economic stability, prompting investors to pull out of risk assets such as crypto. The resulting volatility triggered mass liquidations in the digital asset market.
2. Large-Scale Profit-Taking and Liquidations:
After a strong upward move in July, many whales and leveraged traders began offloading positions to lock in gains. Over **\$630 million in long positions** were liquidated within 24 hours, deepening the price slide and accelerating bearish momentum.
3. Fed Rate-Cut Expectations Deferred:
Updated U.S. economic data led the Federal Reserve to delay anticipated interest rate cuts. The market’s expectations for a September rate cut fell from 63% to 43%, signaling tighter-for-longer monetary conditions. This shift undermined demand for high-risk assets, including Bitcoin.
4. Technical Factors: CME Futures Gap and Breakout Retest:
Analysts noted that a gap in **CME Bitcoin futures** near the \$114,000 level remained unfilled. Price action naturally moved to close that gap while simultaneously retesting a major breakout zone. This correction is seen by some as part of a broader consolidation phase, rather than the start of a prolonged downtrend.
