Cryptocurrency markets fell sharply on Tuesday as a wave of liquidations and whale selling pushed down the prices of Bitcoin and Ether, wiping out hundreds of millions of dollars in leveraged positions.
On Tuesday, Bitcoin briefly dipped below $109,214 after a single entity sold 24,000 BTC, valued at $2.7 billion. According to on-chain data, the sell-off quickly caused a $4,000 drop in Bitcoin’s price. Despite the sell-off, the “whale” still controls over 152,000 BTC, valued at over $17 billion.
Ethereum, which hit an all-time high near $5,000 earlier this week, is also under pressure. The second-largest cryptocurrency retreated to around $4,405 on Tuesday, down from its weekend highs but still one of the strongest performers in recent weeks.
Cryptocurrency market capitalization drops to $3.85 trillion after sharp sell-off in major currencies
CoinGlass data shows that in the past 24 hours, $941.8 million in leveraged positions were liquidated, of which $321.6 million was liquidated in Ethereum and $261.6 million was liquidated in Bitcoin.
Altcoins were not immune, with Solana falling 11.6% to $197 and XRP dropping 5.3% to $2.88.
The market capitalization of all cryptocurrencies fell 4.5% to $3.85 trillion, reversing some of the gains made after Federal Reserve Chairman Jerome Powell’s comments at Jackson Hole last week.
At his annual policy symposium, Powell hinted the Fed could cut interest rates as early as September, citing risks posed by a weak labor market and persistent inflation. His dovish comments spurred a surge in risk assets, initially led by Bitcoin and Ethereum.
Analysts say Ethereum could lead the next leg of the cryptocurrency rally despite macro risks
However, uncertainty stemming from tariffs and political pressures has clouded the outlook. As a result, some economists expect the Fed to cut interest rates in September. Meanwhile, most believe the Fed will wait for more data from the upcoming employment and inflation reports.
Market analysts say this diverging outlook is exacerbating market volatility. Bitget CEO Gracy Chen predicts Bitcoin could trade between $110,000 and $120,000 over the next two weeks. Meanwhile, she suggests Ethereum appears to be trending stronger, with a target price between $4,600 and $5,200.
Mr. Chen said: “On-chain data shows that capital rotation is underway, with whales selling Bitcoin to increase their holdings in Ethereum, which further accelerates ETH’s upward momentum. Macro easing policies, coupled with continued ETF inflows and Ethereum’s growing utility, suggest that ETH is expected to outperform the market in the short term.”
Bitcoin remains supported by institutional demand, but Ethereum’s fundamentals, regulatory clarity and the prospect of an ETF could enable it to lead the next phase of the cryptocurrency rally, analysts say.
