Friday, following the announcement of new tariffs on several countries by President Donald Trump, the Crypto Market Drop shocked investors and triggered massive liquidations. Bitcoin, ether, and Solana prices fell drastically, wiping the recent gains and triggering a worldwide crypto sell-off.
This sudden drop followed as investors reacted to broader economic uncertainty prompted by new Trump tariffs and crypto repercussions. The move stirred fresh fears of inflation and put pressure on the Federal Reserve, challenging its ability to reduce rates.
As a result, investors abandoned riskier assets like cryptocurrencies, and the subsequent sharp correction followed in the footsteps of July’s bullish rally.
Crypto Market Drop Driven by Liquidations and Institutional Retrenchment
The 10% to 41% Tariff shock resulted in financial markets ripples. Bitcoin fell 3% to $113,231.41, ether and Solana by 6% and 5%, respectively. CoinGlass recorded $228 million of bitcoin liquidation and $262 million for ether, spurring on the Crypto Market Drop and shattering trader confidence.
Crypto stocks mirrored the chaos. Coinbase’s shares fell 16% after lackluster Q2 earnings, were accompanied by others such as Circle (-8.4%), Galaxy Digital (-5.4%), Bitmine Immersion (-7.4%), and MicroStrategy (-8.7%). Analysts say the pullback is not panic-related, but rather a “strategic cooldown.”
ETF Inflows Mirror Underlying Resilience During Sell-Off
As speculative investors withdrew, institutional backing remains pertinent. July saw strong ETF inflows, with over $5 billion worth of ether funds, according to Coin Metrics. Bitcoin ETFs saw some $6 billion in the same time frame, albeit registering a $114 million decline on the final day.
Bitcoin ETF inflows show that big players still regard cryptocurrency as a long game. The steady investing, even despite short-term jitters, acted as a buffer for some of the Crypto Market Drop pressure particularly for bitcoin and ether, which were technical favorites despite across-the-board losses.
Why is the Crypto Market Dropping?
As macro uncertainty increases, particularly over interest rates and inflation, the question on everyone’s lips is: why is the crypto market dropping after good July performance? The reason lies in redirecting capital away from high-risk assets due to a lack of new macro catalysts.
However, the underlying technology of the sector and growing institutional support can hold the key to a comeback, once volatility dies down.
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