"September of Hell" is coming: Bitcoin faces its cruelest month yet

August Market Review

Looking back at August, the cryptocurrency market was in a frenzy. Bitcoin hit a new all-time high of $124,457 on August 13th. However, within two weeks, the price plummeted below $108,000, reaching a low of $107,500 on August 29th.

Over the past few years, Bitcoin has often experienced sharp corrections after reaching new all-time highs. This isn't an isolated incident, but rather a normal correction for assets in a highly volatile environment. Douro Labs CEO Mike Cahill stated, "Markets don't always rise unilaterally. Pullbacks of 10% to 15% are extremely common for assets like Bitcoin." The direct cause of the decline: whale sales and chip transfers. On-chain data suggests that concentrated whale activity may be a key trigger for this pullback. On August 24th, a wallet associated with $5 billion worth of Bitcoin transferred approximately $800 million in BTC to the trading platform Hyperunit, garnering market attention. Just five days later, at 10:57 AM on August 29th, the same address made another move, transferring a total of 2,000 Bitcoins in two installments, totaling over $216 million. This batch of Bitcoin was then broken down into small transactions, gradually converted into Ethereum, ultimately accumulating 42,750 ETH, which was then quickly transferred out of the wallet. Such actions not only create actual selling pressure but also impact market sentiment. Because retail investors and follow-on funds often mimic the behavior of whales, selling sentiment can easily be amplified, pushing Bitcoin prices further downward. This isn't an isolated case. In August of this year, other whales engaged in similar asset conversions, with some long-term holders even transferring over 80,000 Bitcoins at once, setting a record. Such large-scale swaps have two direct impacts: Supply shock: A large amount of BTC enters the market in a short period of time, triggering downward price pressure. Market psychology: Retail investors and small and medium-sized funds tend to follow the movements of whales, exacerbating volatility. Funds flow from Bitcoin to Ethereum Echoing the whales' swaps, the overall market capitalization is 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 $4 billion, far exceeding Bitcoin ETFs. Wall Street investors are increasingly viewing ETH as a "tech growth stock" rather than relying solely on "digital gold" like Bitcoin. There are multiple reasons behind this trend. First, Ethereum's potential growth in DeFi, stablecoins, and Web3 applications makes it more suitable for institutional investment. Second, some corporate finance departments have begun to include Ethereum in their asset allocations. Finally, the US market's growing acceptance of Ethereum ETFs, especially those involving staking returns, is expected to receive a decision as early as October, which may further drive capital inflows. BlackRock's Large Portfolio Adjustment Beyond whales, institutional operations are also profoundly influencing the market. BlackRock, the world's largest asset management company, was particularly active in August. On August 14th, US PPI data significantly exceeded expectations, sending market sentiment plummeting. However, BlackRock bucked the trend and aggressively bought assets, increasing its holdings of BTC and ETH through its iShares Bitcoin Trust and iShares Ethereum Trust by over $1 billion, including 4,428 Bitcoin and 105,900 Ethereum. Subsequently, on August 18th and 19th, BlackRock further increased its holdings, purchasing an additional $750 million in crypto assets in just two days. By August 29th, the market detected multiple large outflows of 300 BTC from wallets associated with BlackRock, each worth approximately $33.5 million. While interpretations of these operations vary, the scale and pace of these transactions suggest they more closely resemble fund settlement and rebalancing for ETF products. Currently, BlackRock manages nearly $98.95 billion in crypto assets, comprising 746,016 Bitcoins (valued at approximately $82.4 billion, or 83%) and 3.76 million Ethereum (valued at approximately $16.5 billion, or 16.7%). While Bitcoin remains a core asset, Ethereum's weighting is rapidly increasing, signaling a strategic shift in the institution's asset allocation. Macroeconomic Environment: The Federal Reserve and Interest Rate Expectations Beyond the on-chain competition with institutions, the macroeconomic environment is also a key factor suppressing Bitcoin prices. In mid-August, the US Producer Price Index rose 0.9% year-on-year in July, far exceeding market expectations of 0.2%, further exacerbating market concerns about inflation. In this environment, high interest rates continue to suppress risk appetite, naturally putting downward pressure on Bitcoin. However, in his speech at the end of August, Federal Reserve Chairman Powell hinted at the possibility of a rate cut in September to address slowing economic growth. This signal is a double-edged sword for the market: in the short term, high interest rates will keep investors cautious; however, once a rate cut is implemented, risky assets, including Bitcoin and Ethereum, are expected to see a surge in liquidity. Market Outlook: Will Bitcoin Bottom Out or Retest the Low? Technically, Bitcoin lost support at $110,000 in August. The next key barrier is around $100,000, which is both the 200-day moving average and a previous breakout range. If this level falls below, the price could plummet to the $95,000-$97,000 range. Ethereum is currently trading at $4,318, with key support at $3,900. A break below this level would undermine the previous rebound. Historical data shows that September is typically one of the weakest months for risky assets. For both US stocks and cryptocurrencies, average returns in September are significantly lower than the annual average. It wouldn't be surprising if Bitcoin continued to pull back during this period. However, from a longer-term perspective, shifting macroeconomic policy and continued institutional investment continue to provide solid support for the future performance of Bitcoin and Ethereum. However, the shift in funding structure is making ETH a new favorite on Wall Street. BTC may still be considered "digital gold," but ETH is gradually taking on the role of a "tech growth stock."