Written by: angelilu, Foresight News
On August 1, global financial markets experienced a severe upheaval, and the cryptocurrency market was no exception. BTC fell sharply to 112,751 USDT in the early morning, erasing nearly three weeks of gains and hitting a new low since July 10. As of the time of writing, the BTC price is 113,639 USDT. ETH also dropped to a recent low of 3,431 USDT in the early hours.
According to Coinglass data, the total liquidation across the network in the past 24 hours amounted to $726 million, including $640 million in long liquidations and $86.85 million in short liquidations. Additionally, ETH's liquidation in the past 24 hours was $270 million, exceeding BTC's $165 million.
Cryptocurrency-related stocks in the US performed poorly, with Coinbase closing down 16.7%, Riot Platforms down 17.75%, and Circle down 8.4%. This indicates that investors' risk appetite for crypto assets is declining.
The weak US employment data, Trump's intense political response, and rising geopolitical risks have jointly triggered significant market fluctuations.
Macroeconomic environment: US employment data collapse triggers market turmoil
On the evening of August 1, Beijing time, the US Bureau of Labor Statistics released the non-farm employment report for July, showing that the number of non-farm jobs in the US increased by only 73,000 in July, significantly below the expected 104,000, marking the smallest increase since October of last year. Even more shocking to the market was the Bureau's substantial downward revision of previous data, lowering the employment data for the previous two months by a total of 258,000 jobs.
Trump responds strongly: Immediately fire the head of the Bureau of Labor Statistics
US President Trump reacted strongly to the weak employment data, posting on social media to accuse Biden's appointed head of the Bureau of Labor Statistics, Erika McEntarfer, of falsifying employment data before the election, stating, "Non-farm employment data has been manipulated to embarrass me." Just hours after the non-farm employment report was released, he ordered the immediate firing of Erika McEntarfer. William Wiatrowski will take over as the acting head of the Bureau of Labor Statistics.
Trump stated: "We need accurate employment data. Such important data must be fair and accurate, and cannot be manipulated for political purposes." He also criticized the Federal Reserve for "playing tricks," having significantly cut rates twice before the presidential election, implying that Powell should also "retire."
Moreover, Federal Reserve Governor Kugler announced he would resign early next week, providing Trump with the opportunity to appoint a candidate of his choice, which could significantly impact the Federal Reserve's future monetary policy.
Geopolitical risks are rising
In addition to economic data, geopolitical risks are also on the rise. Trump announced on social media that based on the "provocative remarks" from former Russian President Medvedev, he has ordered the deployment of two nuclear submarines to areas near Russia.
This series of events directly triggered a sharp decline in all three major US stock indices. On August 1, the US stock market saw a daily market value evaporation of over $1 trillion. Meanwhile, risk-averse sentiment heated up, with gold prices skyrocketing, breaking through the $3,350 per ounce threshold, reaching $3,362 per ounce at the time of writing.
August BTC enters the "Devil's Month of Decline"
Historically, the crypto market has not performed well in August. According to statistics from Lookonchain, August and September have historically been the worst months for Bitcoin (BTC) performance. Data shows that in the past 12 years, Bitcoin prices have fallen in 8 of those years during August and September, with a decline probability of 67%.
The market faces a critical turning point: short-term correction or long-term consolidation?
Currently, the market faces a key question: Is this pullback a healthy short-term correction, or are we about to enter a long-term consolidation phase again?
Following this data event, market expectations for a Federal Reserve rate cut in September have continued to rise. CME's "FedWatch" shows that the probability of a 25 basis point rate cut by the Federal Reserve in September has risen to 89.8%, while the probability of maintaining the current rate has dropped to 10.2%. The cumulative probability of a 50 basis point rate cut in October has reached 51.8%. From a macro perspective, the weak US employment data may accelerate the Federal Reserve's rate-cutting pace, which theoretically should have a positive effect on risk assets, including cryptocurrencies.
ARK Invest increases holdings against the trend
Notably, against the backdrop of increasing downward pressure on the market, investment institution ARK Invest increased its holdings on August 1, going against the trend, with multiple funds under ARK simultaneously increasing their holdings in Coinbase (COIN) stock. The ARKK, ARKW, and ARKF funds collectively bought 94,678 shares of Coinbase stock, valued at approximately $33 million. Additionally, Ark Invest purchased about $18.7 million worth of BMNR stock (a publicly traded company using ETH as a financial strategy).
Whale competition: Liquidation vs. bottom-fishing
In terms of whale movements, some sold quickly while others bought the dip: Arthur Hayes sold 2,373 ETH (valued at about $8.32 million), 7.76 million ENA (valued at about $4.62 million), and 38.86 billion PEPE (valued at about $414,700) within the past 6 hours. Meanwhile, according to @ai_9684xtpa's monitoring, an address suspected to belong to Anchorage Digital seems to be buying 14,933 ETH through Galaxy Digital OTC, valued at about $52.07 million. This address received these tokens 4 hours ago (almost at the rebound point of ETH) at an average price of $3,487.
Trader's perspective: Divided opinions on technical analysis
Investment institution DragonFly pointed out that it has marked key accumulation liquidation areas for Bitcoin, suggesting that the market may first test the upper liquidity before exploring the lower liquidity area. It is noteworthy that due to Bitcoin forming a flag pattern, there is a possibility of a direct upward move without touching the bottom liquidity. Although the current trend is still unclear, he emphasized that closely monitoring the BTC liquidity distribution map is crucial for grasping the future market.
Bitcoin trader Crypto Bully pointed out that BTC has ultimately broken below the range low and fell below the volume-weighted average price (VWAP) bands. He stated that he will maintain a short-term trading mode during the period when the Bitcoin price rises to $115,000 or falls to $110,000, attempting to capture short-term bullish opportunities before the Asian trading session.
Another analyst, Crypto Fella, offered a more cautious view, stating, "If Bitcoin falls below the support level of $114,700, it could further test the support area of about $112,000 on the 4-hour chart."
Data analyst and quantitative trader Crypto Painter stated that BTC's descending wedge has broken, and since the price has returned to the wedge, it can only be treated as a descending channel.
Meanwhile, crypto investor Sensei maintains an optimistic view, stating that the Bear Trap has ended, and preparations can be made for a rise. Foresight News notes that the Bear Trap is a critical phase in the market psychology cycle, indicating a quick upward reversal after a brief market downturn, leaving short sellers at a loss.
