The cryptocurrency market has faced a significant downturn triggered by unexpected US inflation figures. Bitcoin fell over $5000 in a short period.
High US Inflation Figures
On Thursday, the US Producer Price Index (PPI) data was released, exceeding economists' expectations. The PPI rose by 0.9% in July compared to the previous month and by 3.3% year-on-year, marking the largest increase since February. Economists had expected an annual rise of around 2.5%, indicating ongoing inflation concerns.
Impact on the Derivative Market
The inflation shock had a dramatic impact on the derivatives market. According to CoinGlass, over $1 billion in crypto positions were liquidated within 24 hours, including about $782 million in long positions. The largest liquidation involved a $6.25 million ETH/USDT position on Bybit.
Possible Support Level Recovery
Short-term technical signals indicate a double top formation for Bitcoin. The $112,000 support level is now critical. If breached, the risk of a fall to $105,000-$110,000 would significantly increase. This underscores the market's susceptibility to macroeconomic shocks.
Recent events in the cryptocurrency market highlight that Bitcoin prices can be significantly influenced by macroeconomic factors. Given elevated leverage levels, volatility is likely to remain high in the coming weeks.
