Cryptocurrency plummets to $115,000: Profit-taking and fresh tariff anxieties cause a significant decline
In July 2023, the crypto market experienced a significant sell-off, with Bitcoin and other cryptocurrencies facing profit-taking and global economic pressures. Here's a breakdown of the key factors that contributed to this turbulence.
- Macroeconomic Pressure and U.S. Federal Reserve Policy
The Federal Reserve's decision to maintain high interest rates around 4.25%-4.5% without signaling any near-term rate cuts disappointed investors. High interest rates encouraged capital to shift away from riskier assets like cryptocurrencies, reducing liquidity in the market. Strong U.S. job market data reinforced this outlook, intensifying selling pressure.
- Shifting Investor Sentiment and Profit Taking
After a strong run in July, many investors, including large holders ("whales"), started taking profits. Weak economic data and trade tensions (such as tariff concerns) affected market confidence, further contributing to price declines.
- Regulatory Delays and Uncertainty
The U.S. Securities and Exchange Commission (SEC) delayed approval of new altcoin ETFs, causing further investor caution and sell-offs in various cryptocurrency tokens. This regulatory uncertainty on altcoins added to the market's volatility.
- Leverage and Market Mechanics
The crypto market's vulnerability to overleveraged trading meant that small price declines could trigger liquidations, amplifying sell-offs. This leverage combined with market panic can create cascading losses and liquidity crunches, worsening the downturn.
- Historical Seasonality and Technical Resistance
Data showed that August has historically been a tough month for Bitcoin, and technical resistance levels near $120,000 also limited upward momentum, contributing to weaker price performance and sentiment.
Asia-Pacific markets also felt the impact of the sell-off, with the White House's renewed tariffs causing selling pressure in Asian stock markets, including the Nikkei 225 and Seoul's KOSPI indices.
However, it's important to note that Ethereum (ETH) posted its best monthly performance since 2022 with a 50% increase in July. Ethereum is being supported by bullish expectations circulating on social media and predictions of reaching $15,000-16,000 thanks to $5.3 billion in spot ETF inflows and institutional demand.
As of now, Bitcoin (BTC) is trading at $114,800.77, having fallen 2.3% amid the sell-off. New whales who accumulated BTC over the past 155 days played a dominant role in the recent sell-off, with approximately $705 million in long positions liquidated in the last 24 hours, signaling market turmoil and cautious investor behavior.
A new report by CryptoQuant reveals that the third-largest profit realization wave of the 2023-2025 bull cycle has occurred so far, with $6-8 billion in realized gains recorded toward the end of July.
As the market continues to evolve, it's crucial for investors to stay informed and adapt their strategies accordingly.
In Turkey, the ongoing inflation and economic instability have weakened the lira, making it difficult for Turkish investors to invest in the global crypto market, especially during the significant sell-off in July 2023. Despite the downturn in Bitcoin and other cryptocurrencies, sports betting and gambling platforms in Turkiye have continued to see high demand, as these activities are less affected by global economic pressures.
