Crypto Bloodbath: What Triggered the August 14 Market Crash?
Crypto markets got wrecked yesterday—here’s why.
The Domino Effect
A perfect storm of liquidations, macro fears, and whale sell-offs slammed digital assets. Bitcoin nosedived 12% in 6 hours, dragging altcoins down with it.
Leverage Liquidation Carnage
Over-leveraged longs got obliterated as BTC breached critical support. Derivatives data shows $1.2B in positions wiped—the highest since June’s FOMC massacre.
Whale Exodus
Blockchain sleuths spotted three separate 5,000+ BTC dumps to exchanges before the crash. Classic ‘sell the news’ after weeks of accumulation.
Silver Lining?
This flush sets up a textbook Wyckoff spring—if you believe in that technical voodoo. Meanwhile, Wall Street’s ‘risk-off’ mood proves they still don’t understand crypto cycles (or basic supply/demand).
Crypto market crash linked to Fed interest rate cut odds
The crypto and stock markets retreated as the odds of a September interest rate cut declined slightly. Polymarket data placed these odds at 73% down from this week’s high of 80%.
Similarly, the CME FedWatch tool shows that the odds dropped from a high of 99% on Wednesday to 90.6%. These odds declined after the US published the July producer price index datawhich were higher than expected.
According to the Bureau of Labor Statistics, PPI ROSE from 0% in June to 0.9% in July and from 2.6% to 3.7% on an annual basis, indicating that tariffs are having an impact.
The PPI report came two days after the bureau released consumer inflation data. The headline CPI remained at 2.7%, while the closely watched Core figure rose to 3.1%, moving further away from the Fed’s 2% target.
These figures arrived a day after Austan Goolsbee, president of the Chicago Federal Reserve, said he WOULD need to see inflation come down before supporting rate cuts. He warned that tariffs will be stagflationary, complicating the Fed’s next meetings.
Surging liquidations contributed to the crypto crash
The crash was also fueled by a spike in liquidations, which add selling pressure to the market. Data from CoinGlass shows total futures open interest peaking at over $215 billion, with the funding rate climbing to +0.0105%.
These figures indicate that most traders were positioned long as Bitcoin and altcoins surged earlier in the day. Following the PPI report, liquidations spiked, pushing crypto prices lower. Panic selling likely compounded the decline as prices fell.
Bitcoin price double-top pattern
Technically, the plunge followed the formation of a double-top pattern, with the neckline at $112,000. This setup often signals more downside, as it reflects investor hesitation to push prices above the previous high.
Worse, bitcoin has also formed a bearish divergence pattern, which is marked by a large bearish candle following a smaller bullish one. This suggests BTC could fall toward the 50-day moving average, which would likely drag top altcoins lower as well.
