Cryptocurrency markets experienced a collective selloff today (August 18), with significant declines across major digital assets. As of press time, Bitcoin fell below $115,000, dropping nearly 3% within 24 hours, while Ethereum, Solana, and Cardano declined over 6%.

According to Coinglass data, cryptocurrency contracts worth over $500 million were liquidated across the network in the past 24 hours, affecting more than 130,000 individuals.

Following US market opening, cryptocurrency-related stocks also declined collectively. DeFi Development dropped over 6%, BMNR fell nearly 5%, Canaan Inc. decreased over 2%, while Coinbase, MicroStrategy, and Circle each declined 1%.

Analysts point out that this cryptocurrency selloff was influenced by multiple factors, with profit-taking being a primary driver. Additionally, weakened Federal Reserve rate cut expectations and recent comments from Treasury Secretary Bessent have dampened market confidence.

**Major Plunge with Over 130,000 Liquidations**

The cryptocurrency market has experienced intense volatility recently. Last week, Bitcoin pushed its all-time high above $124,000, while Ethereum prices once approached $4,800, coming within $100 of the record high reached in November 2021.

However, the correction arrived swiftly. Over recent days, cryptocurrency markets have continued declining. On August 18, Bitcoin, Ethereum and others suffered another sharp drop.

As of press time, Bitcoin fell nearly 3% over 24 hours to $114,900, while Ethereum dropped over 6%, falling below $4,300. Other cryptocurrencies also declined significantly: Hyperliquid fell over 9%, Sui dropped over 8%, Cardano and Solana declined over 6%, and BNB fell over 3%.

CoinMarketCap data shows the total cryptocurrency market capitalization has fallen below $4 trillion, currently standing at $3.88 trillion.

This selloff led to substantial liquidations. Coinglass data indicates that cryptocurrency contract liquidations reached $551 million over the past 24 hours, affecting over 130,000 people. Long positions accounted for $482 million in liquidations, while short positions saw over $69 million liquidated. This means nearly 90% were long position liquidations.

The largest single liquidation occurred on Bitmex-XBTZ25, valued at $7.825 million.

**Market Rotation Rather Than Confidence Collapse**

BTCMarkets cryptocurrency analyst Rachael Lucas stated that spot ETF fund flow data suggests this market decline resulted more from capital rotation rather than investor confidence collapse. Last Friday, funds flowed out of Bitcoin ETFs from Grayscale and Ark Invest, while BlackRock's IBIT continued attracting net inflows.

According to SoSoValue data, spot Ethereum ETFs showed similar trends. Lucas noted, "While overall daily fund flows declined slightly, institutional participation breadth remains substantial, indicating investors are consolidating funds into lower-cost products rather than completely exiting the market."

Treasury Secretary Bessent's statements last week also somewhat undermined cryptocurrency market confidence. "We will not be purchasing these assets," Bessent said in an interview on the 14th, indicating the US government would not make new Bitcoin purchases but would utilize $15-20 billion worth of confiscated Bitcoin to build reserves through criminal or civil asset forfeiture procedures or penalty settlements. This means Bitcoin reserve establishment would not require new fiscal budget allocation.

However, hours later, Bessent softened his stance in a post on X platform. He stated that Bitcoin confiscated by the US government would form the strategic reserve foundation, while the Treasury commits to exploring "budget-neutral" pathways to acquire more Bitcoin, fulfilling Trump's promise to make America the "world's Bitcoin superpower."

**Weakened Fed Rate Cut Expectations Trigger Risk-Averse Behavior**

Kronos Research Chief Investment Officer Vincent Liu indicated that Bitcoin's recent decline reflects cautious investor sentiment amid higher-than-expected US inflation. Elevated inflation reduces Federal Reserve rate cut hopes, strengthens the dollar, and fuels risk-averse behavior.

Previously, lower-than-expected US Consumer Price Index data drove Bitcoin to record highs, but this upward momentum halted following the subsequent July Producer Price Index (PPI) release.

Data disclosed on August 14 showed US July PPI rose 0.9% month-over-month, significantly higher than June's zero growth and market expectations of 0.2%, marking the largest increase since June 2022. The year-over-year increase reached 3.3%, substantially above June's 2.3% and market expectations of 2.6%, hitting the highest level since February this year.

The far-above-expected PPI data reveals new inflationary pressures facing the upstream US industrial chain. Analysts indicate PPI data weakened market hopes for substantial Federal Reserve rate cuts in September. According to CME Fedwatch data, market expectations have shifted from 50 basis point cuts toward more moderate 25 basis point reductions.

"Traders are waiting and watching for clearer macroeconomic and cryptocurrency signals before re-entering the market," Vincent Liu commented.

Oxford Economics Senior Economist Bob Schwartz noted that while September Fed rate cut prospects depend more on upcoming labor market data, July's mixed inflation data makes the Fed uncomfortable. Currently, tariff transmission remains uneven and will continue driving inflation higher in coming months. He believes policymakers may struggle to separate one-time tariff effects from longer-term inflationary pressures.

Schwartz stated that inflation uncertainty will make many Federal Open Market Committee members cautious about rate cuts. Beyond July's weak employment report, broader business and labor market data remains consistent with economic resilience.

He further explained that market attention will focus on the Jackson Hole symposium. Fed Chair Powell's keynote speech Friday will be closely watched for any hints or resistance regarding rate cut expectations.

Cathay Securities points out that US inflation data reflects slow tariff transmission, further strengthening rate cut expectations, but rising future inflation expectations will likely constrain Fed rate cut magnitude. Current expectations of three full-year rate cuts appear overly optimistic and will likely converge. Focus remains on the August 21-23 Jackson Hole Global Central Bank Annual Meeting, where Powell may set the tone for future monetary policy direction.