The crypto market faced a sharp decline on August 1, 2023, resulting in over $629 million in liquidations and a 6.6% drop in total market capitalization.
Overall Trends in the Crypto Market
The crypto market experienced significant sell-offs, leading to losses of over $629 million in liquidations. The total market capitalization dropped to $3.8 trillion, reflecting the increasing risk appetite among investors. Bitcoin (BTC) fell 2.4% to $115,354, while Ethereum (ETH) dropped 4.1% to $3,702. XRP plunged 6.46%, with other major altcoins also losing over 7%. The Crypto Fear and Greed Index dropped six points to 75.
Macroeconomic Factors
Among the key reasons for the drop are newly enacted tariffs in the U.S., which took effect on August 1. These tariffs impose a 25% duty on imports from India and a steep 50% on essential materials such as copper, which could disrupt supply chains crucial to crypto mining and hardware. These trade penalties are projected to increase U.S. consumer prices by up to 3%, further fueling investor uncertainty.
On-Chain Data and Their Significance
Moreover, on-chain data has deepened market concerns. On July 31, five long-dormant Bitcoin wallets from 2010 suddenly moved 250 BTC, worth nearly $30 million. Such movements are often seen as early warning signs of significant market shifts. Additionally, over 50,000 BTC were underwater as of mid-July, indicating substantial losses among investors.
The drop in the crypto market raises questions about its future, as changes in macroeconomic policies and on-chain data continue to keep investors in a state of uncertainty.
