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Once again, Bitcoin finds itself in a downward trend, with more than $150 million in futures contracts liquidated in the past 24 hours, causing ripples throughout the cryptocurrency market.

Liquidations of derivative contracts, including futures and options, tend to occur when asset prices experience prolonged declines. This scenario rings true for the current state of the crypto landscape, as Bitcoin and other cryptocurrencies have been steadily sliding downwards over the past month.

Until recently, the decline in crypto prices seemed gradual, resembling the gradual heating of water with a frog in it. Daily decreases were incremental, and no major shifts occurred within a single session. However, the accumulated effect of these sustained declines has taken its toll on spot prices. In August alone, BTC has plummeted by over 7%.

As prices continue to drop, a significant number of Bitcoin options contracts have wound up unprofitable—terminology used to describe options contracts that expire without generating profit.

The consequence of these unprofitable contracts is the liquidation of Bitcoin futures. This has set in motion a feedback loop, where the falling price of BTC leads to out-of-the-money options and futures being liquidated, in turn driving BTC's price even lower. This cycle repeats as the price drops anew.

As of midday, BTC has witnessed a nearly 3% decrease, while Ethereum (ETH) is down by almost 4%.

The scarcity of significant Bitcoin-related news this summer has played a pivotal role in the ongoing decline of its value. Following the announcement that investment behemoth BlackRock had filed for a Bitcoin ETF pegged to the actual price of Bitcoin (as opposed to just futures contracts), hopes were initially high for a prosperous summer. However, these expectations were not met.

The current sluggish news flow affecting the crypto market has resulted in reduced trading volumes and a subsequent decline in Bitcoin's price. These stagnant market conditions have led to a lack of liquidity, as the absence of significant developments has deterred both buying and selling activities.

Turning to the topic of unprofitable options, the imminent expiration of monthly options contracts at the end of the week has led traders to sell futures contracts to offset their losses. It's crucial to distinguish between options and futures, as they are often misconstrued. Options provide the option to buy or sell an asset at a specific price and time, while futures obligate the trader to buy the asset at a predetermined price on a set date. Both options and futures positions can be closed prior to their delivery date.

The safety of cryptocurrency investments has seen fluctuations this year, marked by a resurgence after 2022's crypto winter, characterized by the collapse of FTX crypto exchange in November. This collapse prompted intensified regulatory scrutiny from U.S. authorities on cryptocurrency exchanges and related entities.

SEC commissioner Gary Gensler has previously asserted that most cryptocurrencies are securities, subject to existing legal precedents. Recent SEC filings against entities such as Binance and Coinbase have further solidified this viewpoint, alleging unlicensed sale and transfer of securities.

However, Gensler and the SEC differentiate Bitcoin itself as a commodity rather than a security, thus falling under the jurisdiction of the CFTC rather than the SEC.

Despite recent price declines, Bitcoin maintains a nearly 70% year-to-date increase. Its present value of approximately $28,000 stands more than 56% lower than its record high of $64,400 achieved in November 2021.

Ever wonder how to spot market volatility at a glance? Just look at the box sizes! 📦 In our latest snapshot, the sheer size of the ETH block tells us that Ethereum is the current epicenter of market action, accounting for over $1 million in liquidations in just one hour. ⚡️
It is also crucial to look at the color divergence. 🎨 While the major caps like $ETH and BTC are seeing green momentum, we are witnessing a "bloodletting" in specific small cap alts like $LUNA and $FOLKS , which are seeing significant long liquidations. 🐻 This visual data is a reminder that Bitcoin's stability doesn't always guarantee safety in the altcoin markets! 🛡️

$BTC
The Federal Reserve is expected to deliver a third consecutive 25 bps rate cut, bringing the policy rate to 3.5%–3.75%. However, the decision will likely be accompanied by a hawkish message, signaling that further cuts are unlikely in the near term. ⚠️📉

The FOMC is divided:
• One side supports more cuts to prevent further weakening in the labor market. 👔📊
• The other side warns that additional easing could worsen inflation, which remains stubbornly above the 2% target at 2.8%. 🔥📈
Markets expect a “hawkish cut”: a rate reduction paired with guidance suggesting the Fed is comfortable pausing. Powell’s press conference is expected to emphasize higher thresholds for future cuts and acknowledge dissent within the committee. 🎙️🦅
Investors will closely watch:
• The dot plot showing policymakers’ rate expectations. 📍
• Updated projections for GDP, unemployment, and inflation. 📑
• Possible signals on balance sheet policy, including whether the Fed will shift from halting QT to modest bond purchases (not full QE). 🏦📉
Oveall, the meeting is complicated by mixed labor market data — slowing hiring, rising layoffs — and inflation still above target. The Fed is likely to cut once more, but deliver a cautious message about what comes next. ⚖️📉

With the Fed signaling a hawkish tone even as it cuts rates, do you think BTC will break to a new upside level, or is the market more likely to correct first? 🚀📉

What’s your view? 💬