Bitcoin briefly fell below $78,000 on Tuesday, hitting a daily low of $77,603 before recovering to around $78,600. The price movement wiped out significant leveraged positions across the cryptocurrency market.
The volatility triggered $264 million in total crypto liquidations. Bitcoin-specific liquidations reached $79 million, with approximately 90% coming from long positions. Across all cryptocurrencies, $187 million in long positions and $77 million in short positions were liquidated.
The decline continues a broader pullback that began after bitcoin dipped below $79,000 following a weekend above that threshold. Bitcoin remains nearly flat in the first week of September, suggesting reduced bullish momentum from its August rally.
Analysts expect sideways trading in the near term as investors await key U.S. economic data. The Bureau of Labor Statistics will release the August Producer Price Index on Thursday and the Consumer Price Index on Friday.
The inflation readings come after a stronger-than-expected nonfarm payrolls report showed resilience in the U.S. labor market. Unexpected inflation increases or slower-than-expected cooling could provide the Federal Reserve additional justification for a rate hike at its upcoming policy meeting.
Higher interest rates would increase yields on traditional risk-free assets such as U.S. Treasuries, potentially reducing investor demand for speculative and non-yielding assets like bitcoin. A tighter monetary outlook could keep bitcoin prices range-bound or pressured lower in the near term.
