On-chain data showing long-dormant Bitcoin wallet activity and short-term holder capitulation further fueled fears of continued selling pressure.
The crypto market was hit by a violent sell-off on August 1, with over $629 million in liquidations rattling investors and triggering widespread losses across major tokens. The total market capitalization dropped by 6.6% to $3.8 trillion, reflecting a broader decline in risk appetite amid rising macroeconomic tensions and unsettling on-chain activity.
Bitcoin (BTC) slid 2.4% to $115,354, while Ethereum (ETH) dropped 4.1% to $3,702. XRP plunged 6.46%, with other major altcoins like Solana and Cardano each losing over 7%. The Crypto Fear and Greed Index dropped six points to 75, a clear signal of mounting anxiety.
Driving the sharp retreat were a series of fresh macroeconomic headwinds. Chief among them were newly enacted U.S. tariffs announced by the White House. Effective August 1, these tariffs impose a 25% duty on Indian imports and a steep 50% on essential materials such as copper, which could disrupt supply chains critical to crypto mining and hardware. Other countries targeted include South Korea, South Africa, and Brazil.
These trade penalties are projected to increase U.S. consumer prices by up to 3%, according to the U.S. Trade Office, further fueling investor uncertainty. Compounding the pressure is a shift in monetary expectations, with strong economic data coming out of the U.S., markets are now pricing in fewer interest rate cuts, signaling a longer period of high rates.
That, in turn, has driven investors away from speculative assets like crypto in favor of safer options like bonds.
Meanwhile, on-chain data has only deepened market worries. On July 31, five long-dormant Bitcoin wallets from 2010, untouched for over 15 years, suddenly moved 250 BTC, worth nearly $30 million. These legacy wallet movements are rare and often interpreted as early warning signs of significant market shifts or sell pressure.
Adding to the bearish sentiment, short-term BTC holders are capitulating. More than 50,000 BTC were underwater as of mid-July, with over 37,000 BTC still in the red by July 25, according to analyst Darkfost.
CryptoQuant’s Maartunn reported a sizable shift of over 223,000 BTC from long-term to short-term wallets in just one month, suggesting that even seasoned holders may be reevaluating their positions.
With technical indicators like the average crypto market Relative Strength Index (RSI) falling to 35.4, deep in bearish territory, and open interest declining 3% to $193 billion, signs of waning momentum are hard to ignore. Whether this is a temporary shakeout or the start of a deeper correction remains to be seen, but for now, the storm has left few tokens unscathed.
