Bitcoin’s remarkable ascent to new heights came to an abrupt halt on Thursday, as traders were hit with a wave of selling triggered by fresh US inflation concerns. The world’s largest cryptocurrency had just shattered its previous record, surging past $124,000 for the first time, before swiftly reversing course.
At its peak earlier this week, Bitcoin was riding high alongside Ether, which touched $4,791.19, just shy of its 2021 all-time high. But optimism evaporated after unexpectedly strong wholesale inflation data from the United States rattled global markets, prompting a rapid sell-off across digital assets.
By Thursday afternoon, Bitcoin had fallen 1.72% to $118,243, with 24-hour trading volumes hitting an eye-watering $108.89 billion, according to CoinMarketCap. Ether also lost momentum, slipping 2% to $4,591.40.
From Inflation Hopes to Inflation Shock
The pullback marked a dramatic change in sentiment from earlier in the week. On Tuesday, a cooler-than-expected US consumer inflation report fuelled hopes the Federal Reserve could cut interest rates as early as September. That data sent Bitcoin, Ether, and equity markets surging, with both the S&P 500 and Nasdaq setting fresh records.
However, Thursday’s wholesale inflation figures painted a less reassuring picture. The higher-than-anticipated readings undermined rate-cut optimism, sparking fears of prolonged monetary tightening. This triggered broad profit-taking across crypto markets, ending Bitcoin’s record-breaking momentum almost as quickly as it began.
Technical Signals Show Short-Term Weakness
Market charts confirm the sudden shift in momentum. TradingView’s four-hour analysis showed Bitcoin’s strong upward trend persisting until 13 August, when it topped out near $121,000. From there, prices broke below a key upward trend line and slipped under the 50-period moving average, a sign of weakening short-term support.
Bitcoin 4hr chart, Source: TradingView
While the 50-day moving average remains above the 200-day moving average, suggesting underlying medium-term optimism, the growing gap between Bitcoin’s spot price and its 50-day average points to possible increased volatility ahead.
Liquidation data further highlights the scale of the downturn. Coinglass reported over $1 billion in positions wiped out within 24 hours, with long traders bearing the brunt of the damage. Some $782 million worth of bullish bets were erased, impacting more than 219,000 traders. The largest single liquidation, a $10 million hit occurred on Bybit’s BTCUSD contract.
Medium-Term Outlook Still Favourable
Despite Thursday’s jolt, analysts caution against overreacting. The medium-term trend remains intact, buoyed by rising institutional participation, expanding adoption, and the broader momentum in risk assets. Bitcoin’s pullback, they argue, is a reminder of the market’s inherent volatility rather than a fundamental reversal.
Still, traders are bracing for choppier sessions in the near term, with inflation uncertainty likely to keep markets on edge. The challenge now is whether Bitcoin can stabilise above the $115,000-$118,000 range and mount another run towards its record high or whether inflation-driven fears will continue to weigh on sentiment.
For now, the cryptocurrency market stands at a crossroads: institutional confidence and adoption trends point one way, while macroeconomic headwinds tug the other. As Thursday’s events proved, even in a bull market, Bitcoin’s path is rarely smooth.
