"Hellish September" arrives, bitcoin faces its toughest month!

August Market Review

Looking back at the entire month of August, the cryptocurrency market was once in a frenzy. Bitcoin hit a new all-time high on August 13, reaching as high as $124,457. However, in less than half a month, the price quickly fell below $108,000, and on August 29, it briefly touched $107,500.

Looking at the past few years, after Bitcoin sets a new all-time high, it is often followed by a sharp correction. This is not an isolated incident, but rather a normalized adjustment for assets in a highly volatile environment. Mike Cahill, CEO of Douro Labs, stated: "The market will not always move in one direction. Corrections of 10% to 15% are extremely common for assets like Bitcoin."

Direct Triggers for the Decline: Whale Sell-offs and Token Transfers

Whale "Rebalancing" Effect

On-chain data indicates that concentrated actions by whales may have been a key trigger for this round of correction.

On August 24, a wallet address associated with $5 billion worth of Bitcoin transferred about $800 million in BTC to the trading platform Hyperunit, drawing market attention. Just five days later, at 10:57 am on August 29, the same address acted again, transferring a total of 2,000 Bitcoins in two batches, worth over $216 million. Subsequently, this batch of Bitcoin was split into smaller transactions and gradually exchanged for Ethereum, ultimately accumulating 42,750 ETH, which was then quickly moved out of the wallet.

Such actions not only bring actual selling pressure but also impact market sentiment. Since retail investors and following funds often mimic whale behavior, selling sentiment can easily be amplified, pushing Bitcoin prices further down. Moreover, this is not an isolated case. In August this year, other whales also engaged in similar asset conversions, with some long-term holders transferring over 80,000 Bitcoins in a single move, setting a historical record.

Such large-scale rebalancing transactions have two direct impacts:

• Supply Shock: A large amount of BTC enters the market in a short period, triggering downward price pressure.

• Market Psychology: Retail and small to medium-sized funds often follow whale actions, intensifying volatility.

Funds Flowing from Bitcoin to Ethereum

Echoing the whale rebalancing, the overall market funds are also undergoing structural changes. Data shows that since August, Bitcoin's market dominance has dropped from 66% to 57%. During the same period, Ethereum ETFs attracted a net inflow of up to $4 billion, far surpassing Bitcoin ETFs. Wall Street funds are increasingly inclined to view ETH as a "technology growth stock," rather than relying solely on Bitcoin as "digital gold."

There are multiple reasons behind this trend. First, Ethereum's potential growth in DeFi, stablecoins, and Web3 applications makes it more in line with institutional investment logic. Second, some corporate treasuries have already begun to include Ethereum in their asset allocations. Finally, the US market's acceptance of Ethereum ETFs continues to increase, especially with ETF applications involving staking yields expected to receive decisions as early as October, which could further drive capital inflows.

BlackRock's Large-scale Rebalancing

Beyond whales, institutional actions are also profoundly impacting the market. The world's largest asset management company, BlackRock, was particularly active in August. On August 14, US PPI data far exceeded expectations, causing market sentiment to plummet that day, but BlackRock instead made aggressive purchases, with its iShares Bitcoin Trust and iShares Ethereum Trust together increasing holdings by over $1 billion in BTC and ETH, including 4,428 Bitcoins and 105,900 Ethereum.

Subsequently, on August 18 and 19, BlackRock continued to increase its positions, buying another $750 million in crypto assets in just two days. By August 29, market monitoring detected that wallets associated with BlackRock had made several consecutive large transfers of 300 BTC each, with each transaction amounting to about $33.5 million. Although interpretations of these actions vary, the scale and pace suggest they are more likely related to ETF product fund settlements and rebalancing.

Currently, BlackRock manages nearly $98.95 billion in crypto assets, holding 746,016 Bitcoins (worth about $82.4 billion, accounting for 83%) and 3.76 million Ethereum (about $16.5 billion, accounting for 16.7%). Although Bitcoin remains the core, the proportion of Ethereum is rising rapidly, indicating a strategic shift in asset allocation for this institution.

Macro Environment: Federal Reserve and Interest Rate Expectations

Aside from on-chain and institutional dynamics, the macroeconomic environment is also an important backdrop suppressing Bitcoin prices. In mid-August, the US Producer Price Index for July rose 0.9% year-on-year, far exceeding the market expectation of 0.2%, once again heightening concerns about inflation. In such an environment, high interest rate policies continue to suppress risk appetite, and Bitcoin naturally faces downward pressure.

However, at the end of August, Federal Reserve Chairman Jerome Powell hinted that a rate cut might be initiated in September to address slowing economic growth. This signal is a double-edged sword for the market: in the short term, maintaining high interest rates keeps funds cautious; but once a rate cut is implemented, risk assets including Bitcoin and Ethereum may see a new wave of liquidity inflows.

Market Outlook: Bottoming Out or Double Dip?

From a technical perspective, Bitcoin has already lost the $110,000 support level in August, with the next key threshold near $100,000. This level is both the location of the 200-day moving average and the previous breakout range. If it breaks below, the price could further test the $95,000 to $97,000 range. Ethereum is currently at $4,318, with key support below at $3,900. If this level is lost, it will undermine the previous rebound structure.

Historical data shows that September is usually one of the weakest months for risk assets. Whether in US stocks or cryptocurrencies, the average return in September is significantly lower than the annual average. It would not be surprising if Bitcoin continues to correct during this period.

However, from a longer-term perspective, the shift in macro monetary policy and continued institutional entry still provide solid support for the future performance of Bitcoin and Ethereum. The difference is that the tilt in capital structure is making ETH the new favorite of Wall Street. BTC may still be "digital gold," but ETH is gradually taking on the role of a "technology growth stock."