Financial turmoil in the cryptocurrency market as Trump's tariffs and employment data trigger concerns among investors, leading to a billion-dollar decline.
In a dramatic turn of events on August 1, 2025, the cryptocurrency market witnessed a significant liquidation event, with nearly $1 billion in forced sell-offs. This was primarily due to overheated leveraged positions and a sharp price downturn in altcoins [1][2].
The liquidation event was most impactful on altcoins such as Ethereum, XRP, Solana, and Dogecoin [1][2]. Ethereum led the liquidations with approximately $200 million in forced closures, followed by XRP at about $115 million, Solana around $58 million, and Bitcoin, despite being relatively stable in price, still saw close to $84 million liquidated [1][2].
Bitcoin's price remained more resilient, holding around $118,578 before dropping modestly below $115,000 after liquidations triggered cascades of automated sell orders. This reflected a rotation of capital from altcoins back into Bitcoin by investors seeking safer assets [1][4][5]. In contrast, XRP and Dogecoin both crashed nearly 10%, and altcoins overall suffered far greater losses than Bitcoin in this purge of leveraged long bets [1][2].
Trading volumes surged to $190 billion across exchanges as liquidations accelerated [1]. Despite the market turbulence, spot ETH ETFs recorded $5.43 billion in net inflows for the month of July [2]. Ethereum ended July with a strong 50% gain, but failed to break above $4,000 and is currently trading around $3,600 [2].
ETF flows for Bitcoin saw $115 million in net outflows on July 31 [2]. Bitcoin dipped below $115,000 following a July high of $122,800 [2]. XRP experienced a 34% monthly gain and stood out with a milder decline of 3%, holding just above $3 [2].
The total crypto market capitalization dropped 8% to below $3.8 trillion during the same period [2]. Solana remains up 10% for the month of July despite the recent fall [2].
The market turmoil was not isolated to the cryptocurrency world. Additional duties on Canadian imports took effect immediately, creating tension in equities, bonds, and crypto markets [3]. President Trump imposed new tariffs as high as 41% on goods imported to the U.S. from 67 countries [3]. The unemployment levels in the U.S. increased to 4.2%, raising concerns about diminishing growth [3].
These events come at a time when Bitcoin is still up 8.1% monthly at the end of July, despite the recent fall [2]. As the market recovers, investors will be closely watching the trends to determine the next steps in the cryptocurrency market.
[1] CoinDesk (2025). Crypto Markets Experience $1 Billion in Liquidations. [online] Available at: https://www.coindesk.com/business/2025/08/01/crypto-markets-experience-1-billion-in-liquidations/
[2] Bloomberg (2025). Cryptocurrencies Plunge as Traders Liquidate $1 Billion in Leveraged Bets. [online] Available at: https://www.bloomberg.com/news/articles/2025-08-01/cryptocurrencies-plunge-as-traders-liquidate-1-billion-in-leveraged-bets
[3] Reuters (2025). Trump Imposes Tariffs on Canadian Imports, Unemployment Rises. [online] Available at: https://www.reuters.com/article/us-usa-canada-tariffs/trump-imposes-tariffs-on-canadian-imports-unemployment-rises-idUSKCN24Q2RE
- The liquidation event in the cryptocurrency market on August 1, 2025, caused approximate $200 million in forced closures of Ethereum, followed by $115 million in XRP, around $58 million in Solana, and nearly $84 million in Bitcoin, with the price of Bitcoin remaining relatively stable.
- In contrast to Bitcoin, XRP and Dogecoin both dropped nearly 10%, and overall, altcoins suffered far greater losses than Bitcoin during this liquidation event.
- As the market recovers, investors will be closely watching the trends in the cryptocurrency market, especially after the significant liquidation event that affected various altcoins such as Ethereum, XRP, Solana, and Dogecoin, and the shift in capital from altcoins back into Bitcoin.
