Leading cryptocurrencies retreated on Wednesday despite a broader rally in equity markets driven by cooling inflation data. Bitcoin (BTC) dipped 0.23% to $63,424, while Ethereum (ETH) fell 0.38% to $1,875. The sell-off extended to altcoins, with XRP down 1.88% to $1.00 and Dogecoin sliding 3.24% to $0.06987.

The price action followed the release of the July Consumer Price Index, which rose 3.4% year-over-year, matching expectations. Core inflation eased to 2.5%, also in line with forecasts. Consequently, the probability of a Federal Reserve interest rate hike in September dropped to 40% from 48% the previous day, according to the CME Fedwatch tool. Major equity indices responded positively, with the S&P 500 gaining 0.26% and the Nasdaq Composite rising 0.54%, though the Dow Jones Industrial Average slipped 0.04%.

Market Prices and ETF Flows

Institutional activity showed divergence between the two largest digital assets. Spot Bitcoin exchange-traded funds recorded net inflows of $4.89 million on Tuesday. In contrast, spot Ethereum ETFs experienced net outflows of $1.8 million. The global cryptocurrency market capitalization stood at $2.17 trillion, reflecting a 0.79% decline over the past 24 hours.

Volatility and Liquidations

Market volatility intensified pressure on leveraged positions. Data from Coinglass indicates that more than $175 million in crypto positions were liquidated in the past 24 hours, with short sellers accounting for $93 million of the losses. This follows a previous period where 70,067 traders were liquidated for a total of $155.39 million. Bitcoin’s open interest rose 0.49% over the last 24 hours; an increase in open interest alongside falling prices typically indicates building short positions. The Crypto Fear & Greed Index reported "Fear" sentiment prevailing in the market.

Top gainers over the 24-hour period included Capricorn (+137.97%), Cysic (+36.06%), and Bitway (+22.28%).

What the Numbers Show

The divergence between Bitcoin’s price stability and high liquidation volumes suggests significant volatility within leveraged trading positions, even as spot prices remain range-bound. The simultaneous inflow into Bitcoin ETFs and outflow from Ethereum ETFs highlights a rotation in institutional preference toward the leading asset during periods of macroeconomic uncertainty. Additionally, on-chain analytics firm CryptoQuant observes that Bitcoin’s losses have spread beyond speculative traders to long-term holders, a condition historically associated with macro bottoms, though not yet accompanied by the emotional exhaustion seen in previous cycles.

Technical Outlook and Developments

Trader CryptosBatman noted that Bitcoin remains confined between $62,500 support and $65,400 resistance. A reclaim of the 200-day exponential moving average near $64,300, followed by a break above $65,400, is required to strengthen the bullish setup. Analyst Michaël van de Poppe warned that Bitcoin risks breaking down to $60,000 if it fails to hold current support near $63,500, stating that failure to test resistance zones could lead to sweeping lows again.

Conversely, Trader KillaXBT described current levels as a potential generational buying opportunity, projecting Bitcoin could trade above $160,000 by 2029 if investors rotate back from AI sectors. Rekt Capital warned that Bitcoin risks turning August into a negative month, aligning with historically bearish performance during bear markets. Notable developments include commentary from Schiff on the rising correlation between gold and Bitcoin, while Bitwise executives suggested Bitcoin’s resilience to bad news signals the bottom of the crypto winter. Hyperliquid is pushing for access to US perpetual futures, and Tom Lee’s BitMine is close to owning 5% of all Ethereum.

NBA champion Tristan Thompson advised his teammates to accumulate Bitcoin every day, framing the digital asset as "digital gold" essential for long-term wealth preservation. Speaking on Anthony Pompliano’s podcast on Tuesday, Thompson stated he holds Bitcoin not due to expectations of dollar collapse, but because he believes the internet will continue to dominate the global economy.

Thompson challenged listeners to find a savings account matching Bitcoin’s historical performance, noting the asset has appreciated by over 60% annually on average across the past 14 years. He emphasized that legislative developments, such as the Genius Act and a potential Clarity Act, could unlock significantly more capital for on-chain activities.

Tactical Trading vs Long-Term Accumulation

While advocating for steady Bitcoin accumulation, Thompson separated this strategy from his active trading activities. He disclosed shorting Hyperliquid, tracked via Hyperliquid Strategies Inc (NASDAQ: PURR), at $61 when sentiment was broadly bullish. Although the price initially moved up, it eventually declined, allowing Thompson to exit the position with a profit.

Thompson described himself as an active perpetuals trader who shares real-time positions on X under the handle TSM13. He noted that teammates frequently contact him during market volatility, to which he consistently replies: "Buy every day. Stack it."

Investment Focus: AI Infrastructure

Thompson expressed skepticism regarding the current artificial intelligence landscape, comparing it to the early dot-com era. He argued that while hundreds of companies are raising tens of millions of dollars, most will eventually fail. Survival, he posited, depends on having real products that consumers are willing to pay for.

He identified energy infrastructure as the critical bottleneck for AI growth, stating that without solving power constraints, investments in data centers and models are ineffective. His most excited current bet is Palomino Labs, founded by former SpaceX technology sellers. The company is developing micro-LED cooling channels that cut data center electricity and water usage by roughly 40%.

What the Numbers Show

Thompson’s investment philosophy reveals a distinct bifurcation between high-conviction long-term holding and tactical short-term trading. While he advocates for passive, daily accumulation of Bitcoin based on its 14-year historical average of over 60% annual appreciation, his engagement with assets like Hyperliquid involves active, sentiment-driven positioning. This contrast is evident in his decision to short HYPE at $61 against bullish consensus, highlighting a strategy where long-term "stacking" coexists with aggressive, real-time market speculation.

On broader market trends, Thompson suggested prediction markets bring fans closer to sports, drawing a parallel to the NBA’s initial resistance followed by eventual embrace of outside platforms for highlights.