Sharp Decline in Cryptocurrencies Amid New Tariffs and Risk Aversion Wave
Cryptocurrency markets witnessed a noticeable decline at the beginning of August, affected by a wave of risk aversion following U.S. President Donald Trump's announcement of new tariffs. Bitcoin, the leading digital currency, recorded a 3% drop to $113,818, its lowest level in three weeks, after reaching a record high of $123,200 on July 14, according to market data.
Bitcoin was not the only one affected, as Ethereum dropped by 5.43% to $3,543, while Solana fell by 6%. This decline came after the total market capitalization of cryptocurrencies surpassed $4 trillion for the first time in July, according to recent indicators.
The U.S. tariff decisions led to significant liquidations in the market, forcing traders to sell their assets to settle debts. According to data from CoinGlass, Bitcoin experienced liquidations worth $228 million within 24 hours, while Ethereum's liquidations reached $262 million.
Cryptocurrency-related stocks also did not escape the negative wave, with Coinbase falling by 16% after a disappointing earnings report, while Circle dropped by 8.4%, and Galaxy Digital by 5.4%. Additionally, Bitmine Immersion, an Ethereum treasury management company, lost 7.4% of its value, while Bitcoin proxy MicroStrategy fell by 8.7%.
Despite the current decline, the U.S. Treasury Secretary expressed optimism about the future of cryptocurrencies, stating on the "X" platform: "The United States has entered the golden age of cryptocurrencies. Under the leadership of the U.S. President, we are exploring new possibilities in decentralized computing and digital payments to unleash the potential of blockchain technology."
He added: "Here, launch your companies. Launch your protocols. And hire your employees."
For his part, Ben Kurland, CEO of the cryptocurrency research platform DYOR, commented: "After the peak in July, this is a healthy strategic slowdown. The markets are not reacting to a crisis, but responding to its absence."
He added: "With no new economic catalysts on the horizon, capital is moving away from speculative assets towards safer markets... It’s a calculated pause."
Cryptocurrencies exited July with strong performance, as Bitcoin rose by 8%, while Ethereum surged by over 49%, according to Coin Metrics. Ethereum exchange-traded funds also saw inflows exceeding $5 billion in July, bringing the total cumulative inflows to $9.64 billion.
However, as August begins, which typically sees a decline in trading volumes and an increase in volatility, cryptocurrencies may face further pressures amid global economic uncertainty.
