The crypto market crash continued on August 29, with Bitcoin and other major cryptocurrencies facing increased selling pressure. A mix of rising liquidations, persistent US inflation, and concerning technical patterns for Bitcoin has intensified the downward trend.
Key Highlights
- Crypto liquidations surged, accelerating the overall market decline.
- US inflation remained higher than expected in July.
- Bitcoin formed a falling wedge pattern, signaling possible further losses.
- Bitcoin dropped below the key $110,000 support level, and total crypto market capitalization fell to $3.78 trillion.
Surging Liquidations Drive the Market Down
One of the main reasons behind the crypto market crash is the recent spike in liquidations. Over the past 24 hours, liquidations jumped 102%, reaching $529 million, while open interest stayed above $200 billion.
Ethereum accounted for $190 million in bullish liquidations, while Bitcoin and Solana each surpassed $40 million. These liquidations happen when crypto exchanges, including Binance and OKX, forcibly close leveraged trades that are losing money to protect their capital.
Such forced sales, combined with manual profit-taking by traders, create additional downward pressure, pushing cryptocurrency prices lower.
Elevated Inflation Adds Pressure
High US inflation is another factor affecting the crypto market crash. Latest data shows core personal consumption expenditures (PCE) rose 0.3% in July, while the headline number increased by 0.2%. Annually, this translates to 2.9% and 2.6%, both above the Federal Reserve’s 2% target.
While the Fed is expected to maintain a cautious approach in its September interest rate decision, attention is increasingly focused on the labor market. Elevated inflation has also impacted broader markets, causing major indices like the S&P 500 and Nasdaq 100 to retreat.
Technical Patterns Suggest Further Bitcoin Risks
Technical indicators show that Bitcoin may be at risk of further declines, contributing to the crypto market crash. A falling wedge and bearish reversal have appeared on the weekly chart, hinting at potential downward movement.
A rising wedge forms when an asset’s price creates two upward-sloping converging trendlines. In Bitcoin’s case, these lines have been developing for months and are now approaching convergence.
Additionally, the MACD and Relative Strength Index (RSI) have been trending downward despite recent rallies. This suggests that Bitcoin could continue to fall, which may also drag altcoins lower.
Conclusion
Today’s crypto market crash is fueled by a combination of increased liquidations, persistent inflation, and concerning technical patterns for Bitcoin. Investors and traders should exercise caution, as both Bitcoin and other cryptocurrencies may face further declines in the coming days.
