Why is the market down today?
Thought for 16s
TLDR
The crypto market fell 3.18% over the last 24h, extending its 7-day decline to 2.51% despite a 13.71% monthly gain. Main factors:
Macroeconomic pressures – New U.S. tariffs and Fed rate fears triggered risk-off moves (CoinMarketCap News).
Leverage unwinding – $629M liquidations (+45% YoY) amplified selling, with Bitcoin long liquidations spiking 147% (Crypto.News).
Deep Dive
1. Macro Headwinds (Bearish Impact)
Overview:
New U.S. tariffs (25% on India, 50% on copper) took effect August 1, threatening inflation and supply chains for crypto mining hardware. Markets priced in delayed Fed rate cuts after strong economic data, reducing risk appetite.
What it means:
Crypto’s 24h correlation with Nasdaq-100 hit 0.90 (CMC data), magnifying equity-linked selloffs. TradFi ETF flows slowed, with BTC ETF AUM flat at $151.5B.
Watch for:
August 1 tariff impacts on chip exports and Friday’s U.S. jobs report.
2. Derivatives Carnage (Bearish Impact)
Overview:
BTC open interest surged 15.89% to $857B, while funding rates plunged 56% – classic leverage froth. Longs dominated liquidations ($144M vs $7M shorts), indicating crowded bullish bets.
What it means:
High leverage (spot/perp ratio 0.4) turned minor dips into cascades. RSI14 at 41.95 shows room for further downside before oversold.
Overview:
Five 2010-era BTC wallets moved coins for the first time, sparking fears of OTC dumps. However, Bitcoin dominance rose to 61.14%, suggesting defensive rotation.
What it means:
While miner moves rattled sentiment, institutional BTC holdings (e.g., Coinbase added 2,509 BTC in Q2) provide structural support.
Conclusion
Today’s drop reflects macro jitters meeting overleveraged markets, with miner activity adding fuel. While technicals suggest near-term pressure (MACD -$31B), the 30-day uptrend (+13.7%) remains intact if $115K BTC holds. Watch whether ETF inflows resurge if equities stabilize post-jobs data.
CMC AI can make mistakes, please DYOR. Not financial advice.