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- Bitcoin (BTC), Ethereum (ETH), and Dogecoin (DOGE) recorded the highest liquidation in the crypto market after the US PPI’s data neutralized the market impact of the CPI report.
- An analyst has also linked the recent liquidation to the high leverage in the market.
Bitcoin’s impressive surge to a new all-time high at $124k on August 14 was short-lived as the broad market liquidation forced a nosedive to $116k. This massive decline affected almost all assets as Ethereum (ETH) recorded a more than 3% fall from its $4,667 high to $4,375.
What Contributed to This Market Drama
As noted in our earlier discussion, the Bureau of Labor Statistics rekindled investors’ confidence on Tuesday, August 12, after disclosing that the Consumer Price Index witnessed a 0.2% adjustment in July and a 2.7% increase on a 12-month basis.
The response was massive as some coins in the crypto market followed the likes of the S&P 500 and NASDAQ to reach new highs. However, the gains could not be sustained as data on the U.S. Producer Price Index (PPI) on Thursday created panic, forcing investors to liquidate.
Specifically, the PPI index jumped by 0.9% in July. This is reportedly the highest in three years. In just 24 hours, around $941 million worth of crypto assets were liquidated. Coinglass data explains that long positions dominated this liquidation with $803 million involved. In all, BTC, ETH, and DOGE were the most affected.
Commenting on this, a senior research associate at Bitwise Max Shannon highlighted that ETH alone comprised 32% of the total liquidation. For the Head of APAC at CoinFund, Dmitry Lapidus, none other than the high leverage in the market contributed to this level of liquidation. Justifying his claim, Lapidus hinted that some traders are even using 100x leverage, which could wipe out all margin when there are any small moves.
Regardless of this massive price drop, traders and investors seem to be “creeping” back into the market as the Bitcoin price makes a marginal rebound to the $117.6k level while ETH surges to $4,449. As outlined in our earlier post, Standard Chartered analysts have hinted that ETH could hit $7,500 by year-end.
What Could Fuel Bitcoin’s Rebound
Fueling Bitcoin’s rebound is Thursday’s comments from Treasury Secretary Scott Bessent, which emphasized the use of forfeited Bitcoin for the strategic reserve.
According to Nansen analyst Jake Kennis, Bitcoin still has strong momentum to stage another rally. CEO at crypto research and trading platform DYOR, Ben Kurland, has also disclosed that the recent run also marks a decisive shift from speculations to real-world integration, institutional adoption, and global liquidity.
Momentum this strong rarely burns out instantly, but it also tends to draw in latecomers who can fuel volatility. Right now the story is less about euphoria and more about validation. Crypto is graduating from ‘alternative’ to ‘essential’ in the global portfolio mix.
As detailed in our recent news coverage, Bitcoin’s potential rebound to the top is supported by multiple indicators including the rising money supply, US retirement accounts, etc. In our recent report, an analysis by a Weiss Crypto analyst was also highlighted to have confirmed a near-term rally for Bitcoin based on the Gold price trend.
