Bitcoin News Today: Bitcoin Plunge Triggers $700M in Liquidations as Macro Pressures Mount

The cryptocurrency market experienced one of its most turbulent days on August 1, 2025, as Bitcoin’s sharp price drop below $113,000 triggered a cascade of forced liquidations across derivatives exchanges. Over $700 million in leveraged positions were wiped out within 24 hours, with nearly 161,000 traders seeing their positions forcibly closed. Long position holders bore the brunt of the losses, accounting for over $423 million in liquidations, while short sellers faced losses of around $85 million [1][2][4]. The largest single liquidation occurred on the ETH/USDC pair on Binance, valued at $4.45 million [1].

Bitcoin and Ethereum were the most heavily impacted, with $161 million and $265 million in positions closed, respectively [1]. The broader market witnessed a dramatic shift in investor sentiment, as the Fear and Greed Index fell by nine points to 51, signaling heightened caution and fear among traders [1]. Meanwhile, Bitcoin’s dominance in the crypto market surged above 62%, indicating its relative stability compared to altcoins, which saw even steeper declines [1].

The sell-off was driven by a confluence of macroeconomic factors. The U.S. Federal Reserve’s decision to hold interest rates near historic highs, combined with escalating global regulatory scrutiny, contributed to reduced capital inflows into the crypto sector during late July and early August [1]. Additionally, Bitcoin’s failure to break above key resistance levels near $122,000 led to profit-taking, further fueling the downward spiral [1]. Analysts have noted that a breakdown below the $112,000 support level could lead to further declines toward $106,000 [1].

August has historically been a weak period for Bitcoin, with average drops ranging from 5% to 20% over the past decade. The recent decline mirrored patterns seen earlier in the year during heightened geopolitical tensions, such as when Bitcoin fell from $100,000 to $75,000 following Trump’s initial tariff announcements [2]. The current sell-off was also amplified by institutional outflows, including a $152.26 million withdrawal from Ethereum ETFs, with Grayscale’s ETHE and Bitwise’s ETHW experiencing the largest outflows [2].

Ethereum, despite its short-term losses, continues to attract corporate demand at twice the rate of Bitcoin [2]. Standard Chartered’s Geoff Kendrick suggested that if this trend continues, Ethereum could return to $4,000 by the end of the year [2]. However, the retail trading landscape remains fragile, with leveraged traders facing significant losses and uncertainty about the market’s near-term direction [1].

The coordinated selling from exchanges like Binance and Coinbase further accelerated the downturn, though some entities were later observed repurchasing assets to stabilize prices [2]. Dogecoin also saw a sharp liquidation spike on Binance, underscoring the broad-based nature of the sell-off [3].

As the market digests these developments, the debate over whether this is a temporary correction or the beginning of a longer bearish phase continues. Institutional confidence remains intact, but for retail traders, the emotional and financial toll of the August 1 liquidation event could have lasting implications [2].

Source: [1] Crypto Chaos: Massive Liquidations Triggered by Bitcoin’s Sudden Price Drop (https://coinmarketcap.com/community/articles/688e16515bd30b44449f4659/)

[2] Markets wobble as Binance and Coinbase wallets unload millions in ETH (https://www.binance.com/en/square/post/27746516621650)

[3] Did $DOGE just trigger a liquidation tsunami on Binance!! (https://www.binance.com/square/post/27720880205993)

[4] Bitcoin News Today: Crypto Liquidations Surge as BTC ... (https://www.ainvest.com/news/bitcoin-news-today-crypto-liquidations-surge-btc-eth-sol-lose-94-98-long-positions-2508/)