02.08.2025 13:43

A dramatic plunge in Bitcoin's value sent shockwaves through the cryptocurrency market on August 1st, 2025. The cryptocurrency plummeted below the $113,000 mark, its most significant drop since July 10th, 2025, triggering over $700 million in liquidations within a single day. This unprecedented market turmoil resulted in the forced closure of nearly 161,000 trader positions.

Losses were heavily skewed towards long positions, exceeding $423 million, while short sellers experienced approximately $85 million in losses. The largest single liquidation, a staggering $4.45 million, occurred on Binance's ETH/USDC pair, illustrating the widespread impact of the downturn. Bitcoin and Ethereum, the two largest cryptocurrencies, suffered disproportionately, with approximately $161 million and $265 million in liquidated positions respectively.

Despite the significant sell-off, Bitcoin's market dominance surprisingly surged past 62%. This indicated a relative outperformance compared to other cryptocurrencies, many of which experienced even more substantial declines. Concurrently, investor sentiment soured, with the Fear and Greed Index plummeting nine points to 51, reflecting a palpable increase in market anxiety. This drop underscores a growing apprehension amongst investors.

This sharp market correction is attributed to a confluence of factors. Macroeconomic headwinds, primarily the US Federal Reserve's sustained high-interest rate policy and an increasingly stringent global regulatory environment, played a significant role. These conditions resulted in a noticeable decrease in capital inflows into the crypto sector throughout late July and early August. Adding to the downward pressure, August has historically been a weak month for Bitcoin, exhibiting average declines of 5% to 20% over the past decade. Technical analysis also points to Bitcoin's failure to overcome key resistance levels near $122,000 as a contributing factor to the sell-off, prompting traders to secure profits.