The cryptocurrency market plummeted on Tuesday as a wave of liquidations and whale-driven sell-offs pushed down Bitcoin and Ethereum, erasing hundreds of millions in leveraged positions.
On Tuesday, Bitcoin briefly fell below $109,214 after a single entity sold 24,000 BTC worth $2.7 billion. According to on-chain data, this sale triggered a rapid decline of $4,000. Despite the sale, whales still control over 152,000 BTC, worth over $17 billion.
Ethereum, which set a historic high near $5,000 earlier this week, is also facing pressure. On Tuesday, the second-largest cryptocurrency fell back to around $4,405, below weekend peaks, although it remains one of the strongest-performing cryptocurrencies in recent weeks.
Cryptocurrency market capitalization fell to $3.85 trillion after a significant sell-off in major equities.
CoinGlass data shows that $24 million in leveraged positions were liquidated over the past 941.8 hours. Ethereum accounted for $32.16 billion in losses, while Bitcoin saw $26.16 billion liquidated.
Altcoins were not spared either, with Solana down 11.6% to $197 and XRP down 5.3% to $2.88.
The total market capitalization of all cryptocurrencies dropped 4.5% to $3.85 trillion, reversing some of the gains made after Federal Reserve Chair Jerome Powell's speech last week in Jackson Hole.
At the annual policy symposium, Powell hinted that the Federal Reserve might start cutting interest rates as early as September due to a weak labor market and ongoing inflation risks. His dovish remarks propelled a surge in risk assets, with Bitcoin and Ethereum initially leading the way.
Analysts say that despite macro risks, Ethereum might still lead the next phase of the cryptocurrency rebound.
However, the uncertainty of tariffs and political pressure have cast a shadow over the outlook. Therefore, some economists expect the Federal Reserve to cut interest rates in September. Meanwhile, most believe the central bank will wait for additional data from upcoming employment and inflation reports.
Market analysts state that the diverging outlook has heightened volatility. In response, Bitget CEO Gracy Chen noted that Bitcoin's trading price could range between $110,000 and $120,000 in the next two weeks. At the same time, she stated that Ethereum looks stronger, targeting between $4,600 and $5,200.
Chen stated, "On-chain data shows that capital rotation is underway, with whales selling Bitcoin to increase their exposure to Ethereum, further accelerating ETH's momentum. This macro easing, combined with ongoing ETF inflows and the growing utility of Ethereum, suggests that ETH is likely to outperform in the short term."
Analysts say Bitcoin remains supported by institutional demand, but Ethereum's fundamentals, regulatory clarity, and ETF prospects could enable it to lead the next phase of the cryptocurrency rebound.
