On August 14, the crypto market faced a sharp downturn after Bitcoin hit a new all-time high. The crash was marked by the release of producer price index data.
Link of the Crash to Fed Rate Cut Odds
The crypto and stock markets retreated as the odds of a September Fed interest rate cut slightly declined. Polymarket data showed these odds dropped from a high of 80% to 73%. Similarly, the CME FedWatch tool displayed a drop from 99% to 90.6%. This shift followed the release of July's producer price index data, which was higher than expected.
Liquidations Contributed to Market Decline
The crash was also fueled by a spike in liquidations that added selling pressure to the market. Data from CoinGlass showed total futures open interest reaching over $215 billion, with the funding rate climbing to +0.0105%. These figures indicate that most traders were positioned long before the PPI report triggered liquidations, pushing crypto prices lower.
Bitcoin Price Double-Top Pattern Formation
Bitcoin’s price drop followed the formation of a double-top pattern, with the neckline at $112,000. This technical setup often signals further declines as it reflects investor hesitation about pushing prices above previous highs. Additionally, Bitcoin formed a bearish divergence pattern, suggesting potential declines toward the 50-day moving average.
The August 14 crypto market crash resulted from a combination of economic data and significant liquidations. The current circumstances illustrate how swiftly market sentiments can shift in the cryptocurrency space.
