On August 1st, Bitcoin’s price dipped below $115,000, marking a low point not observed since July 11th, following a period characterized by significant market swings. This price action represents a correction after reaching its peak on July 14th, when it achieved a record high of $123,000. This decline to $114,000 signifies about a 7% decrease from the high in July and highlights the overall instability that the cryptocurrency market experienced in late July.
The beginning of July saw a strong upward surge. From July 10th to 11th, Bitcoin dramatically climbed from $110,000 to $118,000 in less than a day. This sharp rise translated to a 7.2% jump within 24 hours and coincided with substantial liquidations of leveraged short positions across various derivatives exchanges, which fueled rumors of rising institutional investor engagement.
After the rally of July 11th, BTC continued its upward trajectory, eventually hitting an all-time high of $123,000 on July 14th. However, this high proved to be a temporary barrier. Although the price attempted to stabilize above $118,000 throughout the latter half of July, Bitcoin could not consistently regain its upward momentum.
This period of stagnation was characterized by intraday price movements shrinking into a tighter range, signifying reduced buying strength. As
previously reported by CryptoSlate, some market observers attributed this halt to profit-taking activities from early investors and cautious preparation for the FOMC’s update on inflation this week, which maintained interest rates at 4.4%.
The day’s subsequent downturn was intensified by excessive leverage used in perpetual futures contracts.
According to data on liquidations, over $705 million worth of long positions were liquidated across major crypto exchanges within the past 24 hours. Binance and Bybit accounted for over 67% of this total.
These forced closures of positions happened concurrently with Bitcoin’s descent below $115,000, thereby magnifying the downward trend and pushing the price to levels unseen since the price surge that started on July 10th. Additional market information shows that over $12 million specifically in BTC positions were liquidated within a single hour, highlighting a ripple effect of margin calls.
Even with the selling pressure, Bitcoin’s current value remains more than 8% higher than at the start of July. If BTC falls below the support range of $113,500 to $114,000, there is a possibility of revisiting the price stabilization zones of early July, near $110,000. On-chain metrics from Glassnode, like dwindling active user addresses and decreased exchange withdrawals, also point towards a negative short-term forecast.
The broader altcoin market was hit by a similar downturn to Bitcoin. Ethereum’s price decreased by 6.4%, settling at $3,611, while Solana and XRP both suffered declines exceeding 7% during the same 24-hour period. Liquidations of long positions throughout the entire cryptocurrency market amounted to over $680 million, making up more than 93% of total liquidations. This indicated a heavily skewed landscape towards long positions in derivatives markets before the correction. This asymmetry in leverage likely contributed to the steep decline, as riskier assets amplified losses amidst the drop in BTC prices.
However, it is also conceivable that Bitcoin’s movement followed altcoins for once, with altcoins, laden with excessive leverage, retracing after the ‘alt season’ rally in July.
Bitcoin’s fall to $114,000 caused a shift in investor sentiment, evidenced by a drop in the Fear and Greed Index. The indicator moved to a ‘Neutral’ state, shifting from a previous state of ‘Greed’.
Despite this recent drop unsettling short-term confidence, Bitcoin’s value is still significantly higher than its price range in June near $100,000, and well above its four-month low of $74,000. This signifies a generally positive longer-term market structure even with the volatility experienced recently.