Bitcoin News Today: Leverage and Inflation Crumble Bitcoin's Rally in Volatile Correction

Bitcoin and stocks experienced a synchronized downturn this week, driven by macroeconomic uncertainties, profit-taking, and leveraged liquidations. After touching an all-time high of $124,496 earlier in the week, the price of Bitcoin fell to around $115,000, marking a 7% decline from its peak. Ether also saw a decline, dropping to $4,283.15 after nearing its record $4,800 level. The broader crypto market mirrored the performance of blue-chip coins, with the CoinDesk 20 index, a measure of the industry’s overall health, falling 1.2% during the same period.

The sell-off was compounded by over $500 million in forced liquidations of long positions across the crypto market in just 24 hours. Data from CoinGlass showed that $124 million in Bitcoin longs and $184 million in Ether longs were liquidated as traders scrambled to offset leveraged positions. This type of liquidation typically occurs when positions can no longer sustain their leverage due to market volatility, pushing prices lower in a self-reinforcing cycle. The impact was particularly pronounced in Ethereum, where liquidation pressure reached $170 million within a single session.

Amid the turmoil, macroeconomic factors played a central role. The release of higher-than-expected July wholesale inflation data raised concerns about the timing of a potential Federal Reserve rate cut in September. Traders had anticipated a rate reduction after a similar move in 2024 that fueled a surge in Bitcoin’s price. However, uncertainty over inflation data and resilient employment figures weakened market confidence in an imminent cut. As a result, Polymarket odds of no rate cut in September rose from 12% to 26% within days, signaling a shift in expectations and amplifying downward pressure on risk assets.

In addition to macroeconomic factors, the U.S. Treasury Department’s announcement added to investor disappointment. Treasury Secretary Scott Bessent clarified that President Donald Trump’s strategic bitcoin reserve would be limited to bitcoins forfeited to the federal government, rather than expanding through new acquisitions. This signaled to the market that the government was not pursuing an aggressive accumulation strategy, dampening optimism among institutional and retail investors. The statement came just days after the Treasury had announced its intent to explore budget-neutral pathways to increase its bitcoin holdings.

Despite the recent pullback, the long-term bull case for Bitcoin remains intact. Institutional demand, reflected in the performance of Bitcoin and Ethereum exchange-traded funds (ETFs), has remained robust. For the week ending August 18, Bitcoin ETFs recorded net inflows of $547 million, while Ethereum ETFs saw inflows of $2.9 billion, marking the 14th consecutive week of positive flows for the latter. These figures highlight the continued appeal of crypto as an alternative asset class, especially among institutional investors seeking diversification and long-term exposure.

The broader market environment also appears to be aligning with Bitcoin’s trajectory. A similar pattern of weakness was observed in the Nasdaq Composite, where 49 of the 100 stocks traded below their 50-day moving averages. This parallel movement between crypto and traditional markets underscores the influence of macroeconomic themes and liquidity conditions on both asset classes. Analysts note that the current correction is likely a natural part of the bull cycle rather than an indicator of structural weakness.

Looking ahead, the focus will remain on the Federal Reserve’s policy direction, with the Jackson Hole symposium in Wyoming and Jerome Powell’s speech on August 23 serving as key events. The outcome of these meetings could determine whether financial conditions tighten further, influencing liquidity and asset prices across the board. Additionally, technical indicators suggest that Bitcoin is approaching critical support levels around $112,000 and the 23.6% Fibonacci retracement. A break below these levels could trigger deeper consolidation, while a rebound could set the stage for a retest of the $120,000 and $124,000 resistance levels.

Source:

[1] Bitcoin sinks to $115000 after hitting its newest record, as ... (https://www.cnbc.com/2025/08/18/crypto-market-today.html)

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[6] Crypto is booming. Washington is driving the rally (https://www.cnn.com/2025/08/18/business/bitcoin-crypto-rally-us-stocks)

[7] Is Bitcoin's Bull Run Losing Steam? Here's What Crypto and ... (https://finance.yahoo.com/news/bitcoins-bull-run-losing-steam-072915628.html)

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