Bitcoin and Ethereum lose billions — crypto market fails to withstand tariff fear and sales

On Friday, August 22, crypto assets rose after US Federal Reserve Chairman Jerome Powell hinted at a future interest rate cut. Bitcoin gained a lot, but the leader of the upward movement was Ethereum, which broke a historical record and broke the $4,900 mark. It would seem that, The flagship of the alt-season has accelerated, and the charts are about to turn into an endless green sea. But this week began with a dramatic drop.

The market is falling again

The sudden growth in the cryptocurrency market has led to forced sales of long positions (i.e. liquidations) in ETH worth more than $245 million. Long positions in BTC were liquidated by $175 million. During August 18-22 Eter recorded a net outflow of $237 millionwhich was the first week of negative flows since May 9. Bitcoin-ETFs recorded net outflows of more than $1 billion in the same week.

Over the past 24 hours (i.e., as of August 26), 173,915 traders have been liquidated for $792 million. The largest single liquidation was on the HTX exchange (BTC-USDT) worth $39.24 million.

The drop in the market has also led to a drop in total capitalization from a peak of $4.17 trillion to $3.8 trillion. Top altcoins such as Ethereum (ETH) and Solana (SOL) are down more than 10% from recent highs. What started as a small decline at the beginning of the week has now turned into a sharp drop. If the selling pressure continues, the decline will continue and the market capitalization of cryptocurrencies will fall to $3.47 trillion, and then potentially to $3.26 trillion.

Interestingly, the decline in the cryptocurrency market is uneven between Bitcoin (BTC) and altcoins, as the latter have suffered much more. All signs point to the fact that the altcoin market cap (ALTCAP) will continue to decline and may fall to $1.43 trillion or even $1.35 trillion.

Why did everything go downhill?

First, one of the reasons was the significant growth of Ethereum. Other coins followed the main altcoin. However, many long-term investors and major players sold their ETH amid the new price record. This brought the price down, and the decline in Ethereum dragged other coins down as well.

Secondly, Trump threatens to impose tariffs and export restrictions on countries whose taxes, laws, and regulations target large US tech companies such as Google, Meta, Amazon, and Apple.

The tariffs do not apply directly to crypto assets, as they are not taxed. But potentially, this decision of the US president will lead to an increase in the cost of mining equipment, especially for Bitcoin, as it is mostly imported from China, Taiwan, and other countries that may be subject to customs tariffs.

In addition, new tariffs may slow economic growth and increase inflation — importers will have to pass on their costs to consumers, which will reduce real incomes. This leads to a decrease in available capital for risky investments, including crypto assets. In addition, persistent inflation may force the Federal Reserve to refrain from cutting rates.

Overall, the latest data suggests that although the crypto market may rebound, further declines are likely in the coming weeks.