Crypto Markets Plunge: Rising Liquidations and Sticky Inflation Drive Falldown
The crypto market took a sharp turn downward on August 29, largely due to a spike in liquidation levels and persistent inflation concerns.
Bitcoin’s value dropped below the critical support level of $110,000, leading to a decline in overall market capitalization to roughly $3.78 trillion. One major factor contributing to this slump is a substantial increase in liquidations across various platforms.
in just the past day, liquidations exploded by a staggering 102%, totaling $529 million. Notable amounts included $190 million in Ethereum and over $40 million each in Bitcoin and Solana. Liquidations occur when exchanges such as Binance and OKX must close leveraged trades to safeguard thier assets, often leading to increased selling pressure and subsequent price drops.
Macro-economic factors also played a role. The latest U.S. inflation report showed core personal consumption expenditures increased 0.3% in July, pushing the annual rate to 2.9%—a figure exceeding the Federal Reserve’s desired 2% target. This implied upcoming hawkish interest rate decisions to control inflation.
- US core PCE inflation jumped to 2.9% annually in July.
- Fed may pursue a cautious interest rate hike in September.
Technically, the falling wedge pattern on bitcoin’s chart suggests a looming bear market. While the Relative Strength Index and MACD indicator values remain low despite recent rallies, further declines are possible, possibly affecting other altcoins.
