Main Points：
- Sharp rise in U.S. PPI and core inflation dashed rate-cut expectations, triggering broad crypto sell-off.
- Bitcoin dropped from ~$124K ATH to near $115K; major altcoins—Ethereum, XRP, Solana, Dogecoin—also plunged 3–6%.
- Over $400M–$500M in long crypto positions liquidated in one night; over 115,000 traders affected.
- Geopolitical tensions and uncertain Fed outlook increased risk-off sentiment.
- Institutional players may be accumulating amid chaos; open interest and technical patterns hint at possible rebound.
- Market eyes next Fed signals, Jackson Hole Symposium, and additional macro data.
1. Inflation Shocks Fed Rate-Cut Hopes
On August 14, the U.S. July Producer Price Index (PPI) recorded a +0.9% monthly increase—far above the 0.2% forecast—and a +3.3% year-over-year gain. Core PPI (excluding food and energy) rose similarly by +0.9% MoM, indicating significant inflationary pressure. This data severely dampened market expectations for Fed rate cuts in September.
2. Bitcoin Crashes from All-Time High
Amid this macro shock, Bitcoin fell sharply from its all-time high near $124K to around $115K, a decline of roughly 5%. Ethereum dropped ~5%, XRP ~4%, Solana ~6%, and Dogecoin ~5%.
3. Massive Liquidations Hit the Market
QCP Capital reported that over $400M in long positions were liquidated overnight as BTC slid from $118K to $115K and ETH from ~$4,500 to ~$4,300. CoinGlass data indicate that more than 115,000 traders were liquidated, with total crypto liquidations reaching nearly $500M. Earlier, $155M in liquidations occurred on July 25 when BTC briefly dropped to $115K.
4. Geopolitics and Fed Uncertainty Fuel Sell-Off
Heightened geopolitical tensions—such as failed U.S.–Russia talks and Trump’s shifted peace posture—combined with a less dovish Fed outlook, increased risk-off sentiment. Analysts note that reduced rate cut odds, now in the low to mid-90 percent range, contributed to the sell-off.
5. Market Structure: Shorts, Open Interest, and Institutional Eyes
Despite the crash, open interest surged, indicating growing trader activity. Analysts highlight that institutions and digital asset treasuries were adding to BTC and ETH holdings even amid the pullback, suggesting accumulation zones forming near $115K. Technical analysis points to liquidity sweeps at downside zones with a potential for trapped shorts to catalyze a rebound.
6. Broader Trend: Institutional Adoption & Macro Integration
Beyond the immediate sell-off, Bitcoin’s evolving role in global finance continues. A recent study shows strong correlation between BTC and U.S. equity indices—linked to adoption via ETFs and corporate holdings, with correlations hitting 0.87 in 2024. Meanwhile, empirical research has found Bitcoin reacts negatively to inflation surprises, contradicting its former reputation as an “inflation hedge.”
7. Outlook: Eyes on Jackson Hole & FOMC
Going forward, markets are fixated on upcoming Fed communications—most notably Chair Powell’s speech at the Jackson Hole Symposium—and any additional U.S. macro data. Analysts warn that hawkish cues could extend the slide, while dovish surprises may spark another rally.
Conclusion
In mid-August 2025, a potent blow to interest-rate-cut hopes from elevated U.S. inflation data triggered a painful correction across crypto markets. Bitcoin collapsed from its record highs (~$124K) to near $115K, dragging along Ethereum and other major altcoins. Massive leveraged liquidations—exceeding $400M–$500M—exposed vulnerability in the heavily leveraged ecosystem.
Simultaneously, institutional buyers appeared to be stepping in, adding supply and creating potential support zones. The broader narrative continues: Bitcoin is increasingly integrated into traditional finance, but remains highly responsive to macroeconomic shocks and Fed policies, further weakening its claim as an inflation hedge.
Looking ahead, the market currently teeters between further instability and the possibility of technical rebound, hinging critically on upcoming Fed signals and geopolitical developments.
