Last night, Bitcoin dropped quite sharply, with the largest single-day drop nearing 9%, closing at $114,000, marking the worst day since December 2024. This decline is not due to a single reason; several factors have come together.
Firstly, there are some "obstructions" in the macroeconomics and policy side. The Federal Reserve did not lower interest rates in July, but there was internal debate about whether to do so; the non-farm payroll data for July, just released on August 1, was also disappointing, with only 73,000 new jobs added, significantly lower than the expected 110,000, and the unemployment rate rose to 4.2%, leading to diminished hopes for rate cuts. Additionally, the Trump administration suddenly announced a 25% tariff on Canada and Mexico, which triggered a global risk-averse sentiment, causing funds to withdraw from cryptocurrencies.
Then there are regulatory and sudden risk factors. The SEC launched a "crypto project" to revise regulatory rules, leading to short-term fears of tightened policies; the world's second-largest exchange, Bybit, was also hacked, losing $1.5 billion worth of Ethereum, significantly dampening market confidence, with the fear and greed index plummeting to 28, indicating "extreme fear".
The liquidity and technical aspects are also weak. The Bitcoin spot ETF saw a net outflow of $812 million that day, the second-highest single-day outflow in history, with Fidelity’s ETF alone seeing an outflow of $331 million. On-chain data shows that $260 million in long positions were forcibly liquidated, while the net inflow of Bitcoin in exchanges surged to 70,000 coins, breaking the crucial support level of $115,000, triggering many stop-loss orders from algorithmic trading, leading to more selling as prices fell.
Additionally, market correlations played a role. U.S. tech stocks declined sharply, with the Nasdaq index dropping by 2.24%, and leaders like Amazon and Nvidia were also down; in Argentina, a Memecoin dropped 70% in a day, and tokens from public chains like Solana fell by 18% due to unlocking pressures, negatively affecting overall sentiment.
In short, the combination of tightening liquidity expectations, regulatory uncertainties, industry issues, and technical breakdowns led to this situation. The market has suddenly entered a panic-selling mode; although compliance is the trend in the long term, short-term volatility risks during the policy adjustment period still need to be approached with caution.
