The cryptocurrency market declined by 3.67% in the past 24 hours, resulting in a loss of $264 billion. This drop coincided with a broader sell-off in risk assets following the release of high U.S. inflation data, which reduced expectations for a Federal Reserve rate cut.
Producer Price Index shock (+3.3% vs. expected 2.5%) → Reducing expectations for a Fed policy change
Liquidation of positions valued at $1.03 billion → Significant losses for long positions (80% of the total)
Strong correlation between cryptocurrencies and Nasdaq (+0.87) → Reducing risk due to macroeconomic factors
Detailed Analysis
1. Inflation surprise leads to capital outflows (negative impact)
Overview: The Producer Price Index rose by 3.3% year-on-year in July (Coinspeaker), significantly exceeding expectations, which reduced the likelihood of a rate cut in September from 70% to 48%.
What this means: Traders have liquidated their leveraged positions in cryptocurrencies alongside tech stocks, with Bitcoin's 24-hour correlation with the Nasdaq-100 reaching +0.87. The dollar index also rose by 0.5%, adding pressure to risk assets.
What to watch: Consumer Price Index data on August 15 – Any disappointing results could increase losses.
2. Liquidation of leveraged positions accelerates decline (negative impact)
Overview: Digital currency futures saw a liquidation of positions worth $1.03 billion, the largest since June 2025. Long positions accounted for $787 million (76%) of the losses as the price of BTC fell from $124,210 to $117,698.
What this means: Open interest rose by 34% to $975 billion before the crash (derivatives data), creating an environment conducive to liquidation of positions. The funding rate also reached 0.0105% (+31% daily), indicating excessive leverage in the upward direction.
3. Institutional profit-taking shows (mixed impact)
Overview: Bitcoin exchange-traded funds experienced an outflow of $114 million (CoinMarketCap), while TeraWulf's AI deal led to a 50% increase in the company's stock. Additionally, large wallets transferred 270 million PENGU (worth $8.06 million) to exchanges.
What this means: Traditional money flows turned negative after 7 days of positive flows, despite the growth of ETH exchange-traded funds' assets to $22.68 billion (+76% month-on-month).
Summary
Today's decline combines a macroeconomic reassessment (postponement of Federal rate cut), liquidation of leveraged positions, and institutional rebalancing. With the Relative Strength Index (RSI(14)) at 61 and positive funding rates, volatility is expected to continue. Will tomorrow's Consumer Price Index data determine the recovery trend or reinforce pressure? Watch Nasdaq futures contracts and the BTC support level at $117,000 for directional signals.
