US Inflation Report Triggers Bitcoin Plunge to $115K, $480M Crypto Liquidations

The cryptocurrency market recently experienced a notable price correction, with Bitcoin undergoing a significant pullback that triggered substantial liquidations across derivatives markets. This downturn, observed on August 18, 2025, underscores the increasing sensitivity of digital asset valuations to evolving macroeconomic indicators, particularly shifts in global monetary policy expectations.

• Bitcoin briefly declined to approximately $115,000, representing over a 7% decrease from its recent all-time high.
• Total liquidations surpassed $480 million within a 24-hour period, impacting more than 118,000 traders.
• The primary catalyst was the release of higher-than-anticipated U.S. Producer Price Index (PPI) data for July 2025.
• This data significantly recalibrated investor expectations regarding potential Federal Reserve interest rate cuts.
• Despite immediate price depreciation, overall market sentiment, as indicated by the Fear & Greed Index, did not immediately reflect widespread fear.

Market Correction and Extensive Liquidations

Bitcoin briefly declined to approximately $115,000, representing a more than 7% decrease from its all-time high set just four days prior on August 14, 2025. This movement was mirrored by other major cryptocurrencies, leading to a cascade of forced position closures across derivatives markets. Data indicates that total liquidations surged past $480 million within a 24-hour period, with Ethereum and Bitcoin long positions accounting for the majority of these closures. Over 118,000 traders were impacted by these liquidations, and prominent altcoins like Solana, XRP, and Dogecoin also recorded notable declines.

Primary Catalyst: Elevated U.S. Inflation Data

The primary catalyst for this market adjustment appears to be the release of higher-than-anticipated inflation data from the United States. The U.S. Department of Labor reported that the Producer Price Index (PPI) for July 2025 increased by 3.3% year-over-year, marking the largest surge since February 2025 and significantly exceeding the forecasted 2.5%. This report immediately recalibrated investor expectations regarding the Federal Reserve’s monetary policy stance. Prior to the PPI data, the probability of a rate cut by the Federal Open Market Committee (FOMC) in mid-September was over 90%; post-release, this likelihood, as tracked by CME Group’s forecast, dropped to 84.8%.

Expert Commentary and Shifting Market Sentiment

This shift in sentiment was articulated by Vincent Loh, CIO of Kronos Research, who stated in a comment to The Block, “The recent decline in Bitcoin reflects cautious investor sentiment amid higher-than-expected inflation in the U.S. High inflation reduces hopes for a Fed rate cut, strengthens the dollar, and stimulates risk aversion.” Despite the immediate price depreciation, the overall market sentiment, as indicated by the Fear & Greed Index, did not immediately reflect a shift towards fear. This suggests a continued underlying inclination towards accumulation rather than widespread selling, indicating resilience in long-term outlooks.

Macroeconomic Influences on Digital Asset Valuations

The market’s reaction highlights the critical influence of the Federal Reserve’s policy decisions and the strength of the U.S. dollar on cryptocurrency valuations. Analysts, including Bitwise CIO Matt Hogan, have previously identified a weaker dollar and an accommodative Fed policy as key drivers for sustained growth in the broader crypto market. The current macroeconomic climate, characterized by persistent inflationary pressures and a potentially stronger dollar, therefore presents a significant counter-narrative to these traditional growth facilitators for digital assets.