Review of August's Market

Looking back at August, the cryptocurrency market experienced a period of frenzy. Bitcoin hit a new all-time high of $124,457 on August 13 but fell below $108,000 in less than half a month, dipping to $107,500 on August 29.

Historically, Bitcoin has often undergone sharp pullbacks after reaching new highs. This is not an isolated incident but rather a normal correction for assets in a high-volatility environment. Mike Cahill, CEO of Douro Labs, noted, "Markets don’t go up in a straight line forever. A 10% to 15% pullback is extremely common for an asset like Bitcoin."

Direct Triggers of the Decline: Whale Selling and Chip Transfers

The "Portfolio Rebalancing" Effect of Whales

On-chain data suggests that concentrated operations by whales may have been a key trigger for this pullback.

On August 24, a wallet address associated with $5 billion worth of Bitcoin transferred approximately $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 transferred a total of 2,000 BTC, worth over $216 million, in two separate transactions. Subsequently, these Bitcoins were broken down into smaller trades, gradually exchanged for Ethereum, ultimately accumulating 42,750 ETH, which were quickly moved out of the wallet.

Such actions not only create actual selling pressure but also impact market sentiment. Since retail investors and follow-on funds often mimic whale behavior, selling sentiment can easily amplify, driving Bitcoin prices further down. This is not an isolated case. In August, other whales engaged in similar asset conversions, with some long-term holders transferring over 80,000 BTC in a single move, setting a historical record.

Large-scale portfolio rebalancing transactions have two direct effects:

1. Supply Shock: A large amount of BTC entering the market in a short period creates downward pressure on prices.

2. Market Psychology: Retail and small-to-medium investors often follow whale actions, exacerbating volatility.

Funds Flow from Bitcoin to Ethereum

Echoing the whale rebalancing, the overall market funds are undergoing structural changes. Data shows that Bitcoin’s market dominance dropped from 66% to 57% since August, while Ethereum ETFs attracted a net inflow of $4 billion, far surpassing Bitcoin ETFs. Wall Street funds are increasingly viewing ETH as a "tech growth stock" rather than relying solely on Bitcoin as "digital gold."

This trend is driven by multiple factors. First, Ethereum’s potential growth in DeFi, stablecoins, and Web3 applications aligns better with institutional investment logic. Second, some corporate treasuries have begun including Ethereum in their asset allocations. Finally, the growing acceptance of Ethereum ETFs in the U.S. market, particularly those involving staking rewards, which are expected to receive decisions as early as October, could further drive fund inflows.

BlackRock’s Major Portfolio Adjustments

Beyond whales, institutional operations are also profoundly impacting the market. BlackRock, the world’s largest asset management firm, was particularly active in August. On August 14, U.S. PPI data significantly exceeded expectations, causing market sentiment to sour. However, BlackRock made large逆势 purchases, with its iShares Bitcoin Trust and iShares Ethereum Trust collectively adding over $1 billion in BTC and ETH, including 4,428 BTC and 105,900 ETH.

On August 18 and 19, BlackRock continued to increase its holdings, purchasing an additional $750 million in crypto assets in just two days. By August 29, market monitors detected multiple large transactions of 300 BTC each (worth approximately $33.5 million per transaction) from wallets associated with BlackRock. While interpretations of these actions vary, their scale and rhythm suggest ETF-related fund settlements and rebalancing.

Currently, BlackRock manages nearly $98.95 billion in crypto assets, holding 746,016 BTC (worth approximately $82.4 billion, accounting for 83% of its crypto holdings) and 3.76 million ETH (worth about $16.5 billion, accounting for 16.7%). Although Bitcoin remains the core holding, Ethereum’s proportion is rapidly increasing, indicating a strategic shift in the firm’s asset allocation.

Macro Environment: The Fed and Interest Rate Expectations

Beyond on-chain and institutional dynamics, the macroeconomic environment is also a significant factor suppressing Bitcoin’s price. In mid-August, the U.S. July Producer Price Index rose 0.9% year-on-year, far exceeding the market expectation of 0.2%, reigniting inflation concerns. In such an environment, high-interest-rate policies continue to suppress risk appetite, naturally putting downward pressure on Bitcoin.

However, Fed Chair Jerome Powell hinted in a late-August speech that rate cuts might begin in September to address slowing economic growth. This signal is a double-edged sword for the market: in the short term, maintained high rates keep funds cautious; but once rate cuts are implemented, risk assets, including Bitcoin and Ethereum, are expected to receive a new liquidity boost.

Outlook: Bottoming Out or Retesting Lows?

From a technical perspective, Bitcoin has already broken below the $110,000 support level in August. The next critical level is around $100,000, which coincides with the 200-day moving average and a previous breakout range. If this level is breached, prices could further decline to the $95,000–$97,000 range. Ethereum is currently at $4,318, with key support at $3,900. A break below this level would disrupt its previous rebound structure.

Historical data shows that September is typically one of the weakest months for risk assets. Whether for U.S. stocks or cryptocurrencies, average returns in September are significantly lower than the annual average. If Bitcoin continues to correct during this period, it would not be surprising.

However, from a longer-term perspective, shifts in macroeconomic policies and continued institutional participation provide solid support for the future performance of Bitcoin and Ethereum. The difference is that the tilt in fund structure is making ETH Wall Street’s new favorite. BTC may still be "digital gold," but ETH is gradually taking on the role of a "tech growth stock."