The crypto market fell 1.72% in 24h amid macroeconomic uncertainty and derivatives-driven selling.

Fed rate cut speculation – Weak U.S. jobs data fueled bets on aggressive easing, creating market indecision.

$700M liquidations – U.S. tariff hikes triggered cascading long-position closures, amplifying selling pressure.

Technical breakdown – Prices slipped below critical support levels, accelerating bearish momentum.

Deep Dive

1. Macro Jitters & Fed Policy (Mixed Impact)

Overview:

July’s revised U.S. jobs data (73K new jobs vs. 110K expected) and cumulative downward revisions of 258K positions sparked fears of economic cooling. BlackRock’s Rick Rieder flagged a potential 50bps Fed rate cut in September, creating conflicting narratives about crypto’s role as an inflation hedge versus risk asset.

What it means:

While rate cuts typically boost liquidity-sensitive assets, the abrupt shift in expectations caused short-term volatility. Crypto’s 24h correlation with Nasdaq-100 hit +0.85, reflecting shared sensitivity to growth fears.

2. Leverage Unwind Cascade (Bearish Impact)

Overview:

Derivatives markets saw $709M liquidations in 24h – the largest this year – after U.S. tariff hikes triggered a risk-off wave. Ethereum led with $265M liquidated, mostly longs (77.5% of total).

What it means:

The 25.8% spike in perpetuals open interest to $889.6B preceding the drop created a powder keg. Negative funding rates (-20% 24h change) show traders rushed to short after the breakdown.

Watch for:

BTC’s $108,322-$119,203 liquidation zone – a break beyond could trigger another $5.7B in forced closures.

3. China Regulatory FUD (Bearish Impact)

Overview:

Unverified reports of China considering a Bitcoin ownership ban circulated hours before the drop. While unconfirmed, the news impacted Asian trading sentiment – Chinese crypto communities saw increased stablecoin conversions.

What it means:

Historical precedent (2021 mining ban) makes China-related FUD impactful, though enforcement challenges limit practical effects. The timing exacerbated existing technical weakness.

Conclusion

Today’s dip reflects a perfect storm of macro uncertainty, derivatives over-leverage, and regional regulatory noise. While the Fed pivot narrative could support prices mid-term, traders should monitor whether BTC holds the $113K-$115K support cluster. Key question: Can Ethereum ETFs’ 20-day inflow streak (+$7.3B monthly) offset BTC’s weakening technicals?

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