Key Points
- Bitcoin’s price dropped alongside traditional market indexes, demonstrating its market correlation.
- Market volatility led to significant crypto liquidations, with Ether and Bitcoin being the most impacted.
On August 1, Bitcoin exhibited its link to traditional markets as it fell in sync with stocks and market indexes.
The price of Bitcoin (BTC) has decreased by more than 10% since July 29. On that day, Bitcoin made a significant leap towards $70,000, marking a two-month high following comments made by Donald Trump in Nashville. Currently, it’s trading below $63,500.
Parallel Slump in Crypto and Traditional Markets
The 7% drop in Bitcoin’s value within a day coincided with substantial declines in the S&P 500 and Dow Jones market indexes. The Dow Jones Industrial Average, in particular, plummeted over 500 points in less than an hour.
Large-cap stocks like Amazon and Nvidia also experienced a dip on August 1. Market analysts from The Kobeissi Letter suggest that fears of a U.S. recession might be the cause.
This turbulence in traditional markets and Bitcoin prices also had a ripple effect on the wider cryptocurrency ecosystem. According to data from CoinGecko, the total crypto market cap decreased by 6%, falling to $2.3 trillion after an earlier rebound in the week.
Cryptocurrencies like Ethereum (ETH), Solana (SOL), and Ripple (XRP) entered a downturn as capital began to leave the digital asset industry.
Impact of Market Volatility on Crypto Liquidations
Market volatility did not spare margin positions, as per data from CoinGlass. Over 105,480 traders faced liquidation, and the downturn eradicated $324 million in leveraged positions.
Ether longs were at the forefront of crypto liquidations with $72 million. This indicates that traders who were optimistic about higher ETH prices were hit with margin calls. Bitcoin followed closely with $69 million in long liquidations.
After Bitcoin and Ether, SOL, XRP, and Dogecoin (DOGE) were the three most liquidated assets.
