Bitcoin's Price Plummeted to $25K – What Triggered This Collapse?
In Brief
During the night from August 17 to 18, the altcoin market faced a severe downturn. Both Bitcoin and Ethereum saw significant decreases in their values. Over the past 24 hours, Bitcoin dropped by 7.53%, while Ethereum fell by 6.73%.
Several factors may have contributed to this dramatic turn of events. Notably, SpaceX is reported to have liquidated $373 million in Bitcoin; meanwhile, US Treasury bond yields hit their highest levels since October; the Evergrande Group filed for Chapter 15 bankruptcy protection; and a crypto whale reportedly offloaded large amounts of cryptocurrency.
As previously mentioned, the night of August 17 to 18 witnessed a striking decline in the altcoin market.
According to the crypto analytics platform Parsec, the DeFi sector felt the brunt of the market chaos, with liquidations skyrocketing over $75 million in just 24 hours, marking a record high for the year.
$54 million worth of Ethereum holdings were liquidated during this turbulent timeframe. There's a growing fear that if Ethereum's price falls around $1,480, assets valued at about $268 million could face forced liquidation.
But what sequence of events triggered this unforeseen economic downturn?
US Treasury bond yields have reached heights not seen since October
On August 16, the Federal Reserve released the 'Minutes of the Federal Open Market Committee', documenting discussions held from July 25 to July 26 at the Board of Governors’ headquarters. protocol The document revealed that the Central Bank is planning to raise interest rates further if inflation doesn't show significant signs of moderation. Following this revelation, US Treasury bond yields climbed to their highest point since October.
At the same time, Bitcoin's price slipped from approximately $29,200 down to around $28,700 on August 16.
Then, on August 17 at 3:22 PM ET, the Wall Street Journal disclosed that Elon Musk’s SpaceX had sold $373 million in Bitcoin, which the company had held on its books in 2021 and 2022.
Space X sold $373 million worth of Bitcoin
Price declines began at 5:40 PM ET, just two hours and twenty minutes after this news broke. Within four minutes, Bitcoin's price fell drastically from around $28,553 to about $25,166 on Binance. On less liquid exchanges, prices dipped even lower, hitting a low of $24,400, which triggered panic liquidations. reported Initially, Musk acquired Bitcoin within the $28,000–30,000 range. His vehicle, Tesla, also had Bitcoin holdings but has since offloaded a substantial chunk, totaling about $936 million in value.
A trader known by the handle @TheFlowHorse noted that a single major seller likely catalyzed this unexpected price drop, which added extra pressure in the derivatives market.
This trader remarked to Cointelegraph, \"It wasn't simply a natural decline. A large player sold off intentionally, setting the entire chain reaction in motion. Spot trading volumes were minor compared to perpetual contracts.\"
Whale selling significant amounts
As reported by Cointelegraph Meanwhile, the Chinese property giant Evergrande Group sought Chapter 15 bankruptcy protection in New York. This significant default by Evergrande had far-reaching consequences for China's property sector and the wider economy.
Real estate, traditionally a key driver of China’s economic growth, has accounted for nearly 30% of the country’s GDP. With Evergrande in trouble, several other major Chinese developers also faced defaults. Overall, the nation is experiencing an economic slowdown that might steer investors away from cryptocurrencies.
Evergrande Group’s bankruptcy
At 8:30 pm ET on August 17, CNN broke the news Both Bitcoin and Ethereum have suffered noteworthy declines in their values. In the last day alone, Bitcoin dropped by 7.53%, while Ethereum saw a 6.73% decrease. At the time of writing, Bitcoin was priced at $26,542, and Ethereum was at $1,680.
The market is also grappling with liquidity issues for transactions. Interestingly, despite positive news, prices haven't seen a significant uptick in the short term. The loss of confidence became even more evident as Bitcoin slid under the $29,000 mark.
What to expect
Significant market volatility has deeply impacted both BTC and ETH, as investors brace for large price swings. Yet, once stability is restored, this sense of uncertainty is expected to wane.
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Disclaimer
In line with the Trust Project guidelines She holds a Master’s degree in Public Communications and is pursuing a second major in International Business Management. In her spare time, she enjoys photography and fashion styling. At just 13, she launched her first fashion blog, which fueled her passion for journalism and style.
