The cryptocurrency market experienced a severe downturn on August 5, 2024, with Bitcoin leading the plunge. Prices collapsed amid global asset sell-offs, triggering massive liquidations across exchanges.
Market Turmoil: Bitcoin's Sharp Decline
- Price Drop: Bitcoin fell below $54,000 in early trading before crashing under $50,000—a 16% intraday loss—later recovering to a 12.6% decline.
- Liquidations: Coinglass reported 278,000 positions liquidated within 24 hours, totaling $1.06 billion, predominantly long contracts.
Altcoins Follow Downtrend
- Ethereum (ETH): Dropped 20% to under $2,200, later stabilizing near $2,300.
- Solana (SOL): Briefly hit $120, now at $123 (12% down).
- Binance Coin (BNB): Fell 15% below $450.
Jeffrey Ding, HashKey Group’s chief analyst, noted:
"Over $500 billion evaporated since August 2—the worst three-day sell-off in a year. Solana suffered most among top-10 tokens, losing 30% since July 30."
Key Factors Behind the Crash
Macroeconomic Pressures:
- Asian markets extended losses after U.S. stocks plummeted.
- Fed rate concerns and Middle East tensions worsened sentiment.
- Oil prices rose as Saudi Arabia hiked export crude costs.
Institutional Sell-Offs:
- Suspected large-scale crypto asset dumping by entities like Jump Trading.
- EmberCN reported Jump moved $410 million in wstETH to exchanges, exacerbating ETH’s decline.
Leverage Liquidation Spiral:
- Four "whale" wallets lost 14,653 ETH ($33.54 million) to forced liquidations.
- DeFi lending platforms saw $320 million in liquidations—a yearly record.
- A single Binance ETH/USDC long position was liquidated for $10.9 million.
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FAQ: Understanding the Crash
Q: Why did Bitcoin drop so suddenly?
A: Combination of macroeconomic fears, institutional sell-offs, and cascading liquidations amplified selling pressure.
Q: How long might this downturn last?
A: Analysts predict continued volatility amid unresolved global risks and leveraged position unwinding.
Q: Should investors buy the dip?
A: Caution advised—market sentiment remains fragile with potential further downside.
The crypto market faces critical weeks ahead as traders monitor macroeconomic signals and institutional moves. Traders should prioritize risk management in this uncertain climate.