Core viewpoint summary
The current cryptocurrency market is at a critical turning point, with Bank of America's revision of Federal Reserve interest rate cut expectations prompting a reassessment of risk asset pricing logic in the market. Bitcoin (BTC) has confirmed support levels after experiencing a high-level pullback, forming a 'higher low' bullish pattern, with technical indicators showing it is preparing to challenge the historical high of $122,000. Ethereum (ETH), on the other hand, is facing key resistance near $4,300, with a clear high-level consolidation situation, and the market is waiting for a clear breakout signal. As Bitcoin's dominance has significantly dropped from 72% to 60%, the trend of fund diversion to altcoins is becoming increasingly apparent, with institutions predicting that the altcoin season has officially begun. Investors should closely monitor the upcoming U.S. inflation data and the Jackson Hole central bank annual meeting in August, as these events may serve as key catalysts for the next phase of market movements.
1. The impact of Bank of America's interest rate cut expectations adjustment on the cryptocurrency market
1.1 Bank of America's stance shift: From expectation of interest rate cuts to maintaining high rates
Bank of America CEO Brian Moynihan recently stated in an interview with CNBC that Bank of America economists predict the Federal Reserve will not cut interest rates in 2025, a view that sharply contrasts with the market's general expectations. Moynihan explained, 'Our economists believe there will not be an economic recession. They expect the U.S. economy to grow about 1%-1.5% this year. They believe the Federal Reserve will not cut rates because inflation will take longer to decline in 2025. They will cut rates in 2026.'
This position is consistent with a report previously released by Bank of America Global Research. Bank of America economist Aditya Bhave proposed a view contrary to market consensus: the Federal Reserve will not cut interest rates in 2025. Bank of America expects that when signs of inflation peaking appear, there may be a 100 basis point rate cut in the second half of 2025, while the market currently reflects only a 40 basis point rate cut expectation. This policy expectation falling short may trigger a significant market adjustment, having a profound impact on risk assets such as cryptocurrencies.
1.2 The divergence in market expectations for interest rate cuts is intensifying
Despite Bank of America's above predictions, there remains a significant divergence in market expectations regarding the Federal Reserve's policy path. According to CME's FedWatch tool, as of August 12, the market estimated a 91.2% probability that the Federal Reserve will lower rates by 25 basis points at the September meeting. This divergence is reflected in investor behavior, as Bank of America's August FMS survey shows that investor sentiment indicators have risen to a six-month high, indicating a clear improvement in market sentiment.
However, investor concerns about inflation are rising. Among the top tail risks in the eyes of investors, the concern that 'inflation prevents the Federal Reserve from cutting interest rates' has risen from 20% to 27%, following closely behind 'trade wars triggering a global recession' (29%). This indicates that uncertainty regarding the monetary policy outlook is increasing, which may lead to short-term volatility in the cryptocurrency market.
1.3 Specific impacts on the cryptocurrency market
Bank of America's adjustment of interest rate cut expectations has had multiple impacts on the cryptocurrency market:
Adjustment of risk preferences: Changes in market expectations for interest rate policies directly affect investors' risk preferences. If the Federal Reserve maintains high rates for a longer period, the yields in traditional financial markets will remain relatively attractive, possibly leading some funds to shift from cryptocurrencies to traditional assets.
Changes in fund flow: Bank of America's August FMS survey shows that despite improving market sentiment, institutional investors' allocation to cryptocurrencies and gold remains extremely low. Only 9% of respondents hold cryptocurrencies, and among these holders, the average allocation ratio is only 3.2%. This low allocation indicates that institutional interest in cryptocurrencies has not significantly recovered.
Re-evaluation of Bitcoin as an inflation hedge: Bank of America's survey shows that concerns about inflation preventing the Federal Reserve from cutting interest rates have risen to 27%. In an environment of persistently high inflation, the narrative of Bitcoin as a potential inflation hedge may regain market attention, possibly providing support for Bitcoin's price.
Increased market volatility: Uncertainty in policy expectations usually leads to increased market volatility. In the context of unclear Federal Reserve policy prospects, the cryptocurrency market may face greater price fluctuations.
2. Analysis of Bitcoin's pullback confirmation formation and subsequent trend prediction
2.1 Recent Bitcoin price trend review
Recently, Bitcoin prices have experienced significant volatility. According to market data, Bitcoin reached an all-time high of $122,000 in early August, followed by a pullback adjustment. During the pullback, Bitcoin formed a technical pattern of 'higher lows', which is seen as a healthy adjustment signal in an upward trend. As of August 12, Bitcoin prices were capped below $120,000, implying potential breakout potential.
It is worth noting that Bitcoin's pullback confirmation is not a weak rebound but a standard technical pullback confirmation. This pattern indicates that the market is consolidating support levels before further increases, preparing for subsequent breakouts.
2.2 Technical analysis of the pullback confirmation formation
The pullback confirmation formation of Bitcoin holds significant importance in technical analysis:
Inverse head and shoulders pattern confirmation: A clear inverse head and shoulders pattern has formed on Bitcoin's daily chart, successfully breaking the 'neckline' position. Once the breakout is confirmed, the target price of this pattern is often the height from the bottom to the neckline moved upward equidistantly. According to this measurement, Bitcoin's target price is approximately around $148,000.
Verification of key support levels: Bitcoin has tested the support role of previous high point areas during its pullback process. Last week, Bitcoin completed a pullback test of the previous high, which is an important process for the market to confirm the validity of support. If Bitcoin briefly rebounds here and then weakens again, or even falls back below $100,000 / $98,000, it may indicate a bearish market outlook; conversely, if the pullback confirms and rises again, it indicates the continuation of a bull market.
Formation of higher lows: On a larger time frame, Bitcoin prices have formed higher lows after the pullback, which is an early signal of an upward trend. Prices are now moving upward, retesting previous historical high levels.
Elliott Wave Theory perspective: Some analysts believe that the current pullback is part of a broader Elliott wave structure, preparing for the next bull market phase at the end of 2025. This strategy suggests that investors wait to accumulate after the pullback, preparing for the next upward phase.
2.3 Key factors influencing Bitcoin's subsequent trend
The subsequent trend of Bitcoin will be influenced by various factors:
Macroeconomic data: The upcoming U.S. inflation data will be a key factor influencing Federal Reserve policy expectations, subsequently affecting Bitcoin prices. If inflation data exceed expectations, it may strengthen the Federal Reserve's stance on maintaining high rates, putting pressure on risk assets; conversely, it may boost market sentiment.
ETF fund flow: The flow of funds into Bitcoin ETFs will continue to affect price trends. Sustained large net inflows provide solid support for the market, especially during pullbacks.
Market sentiment indicators: The cryptocurrency Fear and Greed Index is currently at 62/100, shifting from neutral to greed. This sentiment change may support Bitcoin's price but also indicates an increased risk of short-term pullbacks.
Technical factors: Bitcoin's technical indicators show that MACD's downward momentum is weakening, but it remains in a golden cross state at the daily level, indicating that the bullish trend has not completely ended and there is still upward momentum.
2.4 Bitcoin follow-up trend forecast
Based on technical analysis and the current market environment, Bitcoin's subsequent trend may present the following scenarios:
Optimistic scenario: If Bitcoin can effectively break through the $120,000 resistance level and maintain above it, it may initiate a new round of upward momentum, targeting the $148,000 inverse head and shoulders pattern target. Conditions triggering this scenario include: inflation data below expectations, the Federal Reserve signaling dovishness, and sustained inflow of ETF funds.
Neutral scenario: Bitcoin may continue to fluctuate within the $115,000 - $120,000 range, waiting for further clarity on the macroeconomic environment and policy signals. In this case, the market will continue to digest the previous gains, preparing for the next phase of movement.
Pessimistic scenario: If Bitcoin fails to hold key support levels, particularly breaking below the psychological level of $100,000, it may trigger a deeper correction. Conditions triggering this scenario include: inflation data exceeding expectations, the Federal Reserve maintaining a hawkish stance, and a sharp deterioration in market sentiment.
3. Analysis of Ethereum's high-level consolidation situation and development direction
3.1 Recent performance of Ethereum and characteristics of high-level consolidation
Ethereum has performed strongly recently, reaching $4,300 in early August, marking its strongest performance since 2021. However, Ethereum then entered a high-level consolidation phase, facing evident resistance near $4,300.
Ethereum's high-level consolidation situation has the following characteristics:
Price range volatility: Ethereum's price has formed a clear trading range between $4,163 and $4,315. This range fluctuation indicates that there are differing views in the market at the current price level.
Changes in volume-price relationship: Ethereum has shown decreasing trading volume during its rise, forming a divergence phenomenon, which is often seen as a signal of weakening upward momentum.
Complex technical formations: Ethereum's price is nearing a strong resistance range ($4,350-$4,367), while the technical picture shows a bullish moving average arrangement. However, the extreme shrinkage in trading volume and the emergence of a 'evening star' formation create a strong bearish signal, making it difficult for the market to form a clear direction in the short term.
3.2 Key factors influencing Ethereum's high-level consolidation
Ethereum's high-level consolidation situation is influenced by various factors:
Institutional fund inflow: The inflow of funds into Ethereum ETFs is an important factor driving its price increase. Data shows that $222 million flowed into Ethereum ETFs within just two days, with BlackRock's ETHA product leading this trend. This sustained inflow of institutional funds provides support for Ethereum's price.
Technological innovation and development: Continuous technological upgrades and innovations in the Ethereum network, such as the upcoming Dencun upgrade, have enhanced market confidence in Ethereum's long-term development prospects.
Changes in the regulatory environment: Changes in the global cryptocurrency regulatory environment, particularly the U.S. regulatory attitude towards cryptocurrencies, have a significant impact on Ethereum's price. The recent regulatory situation has been relatively stable, providing some certainty to the market.
Market sentiment volatility: The cryptocurrency market sentiment has shifted from 'extreme greed' to 'neutral', affecting Ethereum's price trend. Currently, market sentiment is neutral, with investors cautiously approaching high-priced assets.
3.3 Potential development directions and key price points for Ethereum
Based on the current market conditions, there are mainly three potential development directions for Ethereum:
Upward breakout scenario: If Ethereum can effectively break through the $4,315 resistance level, it may initiate a new round of upward momentum, targeting the $4,400-$4,500 range. This range also represents the upper boundary of Ethereum's consolidation range over the past 18 months; if broken, it will open up space for Ethereum to rise further.
Key signals for breakout include: significant increase in trading volume, prices consistently closing above resistance levels, and a shift in market sentiment to positive.
Downward pullback scenario: If Ethereum fails to break through the resistance level, it may pull back to the strong support area of $4,190. In this case, Ethereum may look for new buying support near the support level, forming a new trading range.
Key signals for pullback include: prices breaking below recent lows, increased trading volume accompanied by price declines, and technical indicators showing an oversold state.
Continued consolidation scenario: Considering that both technical aspects and external environments do not provide sufficient driving force, Ethereum may continue to maintain a sideways fluctuation within the current range. In this case, the market will wait for clearer macroeconomic signals or industry development catalysts.
4. Analysis of altcoin fund diversion opportunities and potential performance predictions
4.1 Market signals of fund diversion trend
As mainstream cryptocurrencies such as Bitcoin and Ethereum enter a high-level consolidation phase, the market is closely watching whether funds will flow into altcoins. Several signals already indicate that a trend of fund diversion is forming:
Decline in Bitcoin dominance: Bitcoin's dominance has dropped from 72% to 60%, indicating a significant shift of funds from Bitcoin to other cryptocurrencies, forming a classic altcoin and Bitcoin rotation pattern similar to previous bull market cycles.
Net capital change turning point: According to Glassnode data, Ethereum has outperformed Bitcoin in net capital changes, which is often seen as a signal of the start of the altcoin season.
Changes in futures trading volume distribution: Altcoins currently account for 83% of the total trading volume in cryptocurrency futures, while Bitcoin only accounts for 17%. This indicates that speculative capital is flowing into alternative tokens across major exchanges.
Institutional forecast: Bernstein analysts predict that as Ethereum rises to a multi-year high and the altcoin season begins, Coinbase will be the biggest beneficiary. This forecast indicates that institutional investors are beginning to pay attention to investment opportunities in altcoins.
4.2 Key influencing factors for timing of fund diversion
The timing of fund diversion will be influenced by various factors:
Mainstream coin price trends: If Bitcoin and Ethereum continue to maintain high-level consolidation or start to pull back, investors may shift some funds to relatively undervalued altcoins in search of higher returns.
Macroeconomic events: Macroeconomic events in August, such as updates on U.S. inflation data, the Jackson Hole central bank annual meeting speech, and trade tensions, will affect short-term market trends. These events may determine market sentiment and fund flow.
Changes in the regulatory environment: Favorable regulations expected to be introduced by the end of August may act as a catalyst for the explosive growth of altcoins. Improvements in the regulatory environment will reduce market uncertainty and attract more funds into the cryptocurrency market.
Technological innovation and application implementation: The technological progress and actual application of altcoin projects will influence the timing and scale of fund diversion. In particular, projects that can solve practical problems or provide unique value are more likely to attract fund inflows.
4.3 Potential performance predictions of altcoins after fund diversion
If funds begin to flow into altcoins, different types of altcoins may perform differently:
Mainstream altcoins (such as Ethereum, Ripple, TRON, etc.):
Ethereum: As the second-largest cryptocurrency by market capitalization, Ethereum may continue to benefit from institutional fund inflows and technological developments. If Ethereum breaks through the current resistance levels, it may drive the entire altcoin market upward.
Ripple (XRP): The price prediction target range for XRP in August 2025 is $2.92 to $3.36, with the potential to break above $5.25 or higher if the spot ETF is approved.
TRON (TRX): TRON dominates the global stablecoin trading volume, especially in the USDT transfer sector in emerging markets. With Canary Capital applying to launch a spot ETF with integrated staking features, TRON may gain more institutional attention.
Smart contract platform tokens (such as Solana, Polygon, etc.):
These tokens typically form competitive relationships with the Ethereum ecosystem. As Ethereum enters a consolidation phase, some funds may shift to these platforms. Recent data shows that as ETH breaks through $4,200, technical breakouts have formed new bullish momentum in tokens like Optimism (OP) and Polygon (MATIC).
Emerging projects and innovative tracks:
Early stage projects like Maga Coin Finance are attracting market attention, seen as potential investment opportunities for excess returns.
Projects with practical application scenarios, such as BlockDAG, achieved significant success in their presale in August, raising over $358 million and selling 24.5 billion tokens to 200,000 independent holders.
Meme coins and community-driven projects:
Dogecoin (DOGE), as the original memecoin, while maintaining cultural dominance, has also attracted the participation of institutional whales. Price predictions for Dogecoin indicate a slight increase to around $0.27 to $0.37, but optimistic scenarios related to potential ETF news could push the price above $0.70.
4.4 Fund diversion risk warning
Although fund diversion may provide upward opportunities for altcoins, investors should also be wary of the following risks:
Liquidity risk: The liquidity in the altcoin market is generally lower than that of mainstream coins, which may lead to larger price fluctuations and higher slippage when buying and selling.
Unlocking pressure: $2.99 billion worth of tokens will be unlocked in August, with Solana's single unlock amount reaching $747 million and Avalanche unlocking $268 million. These unlocks may lead to an increase in supply in the short term, putting pressure on prices.
Regulatory risk: Changes in the regulatory environment may have significant impacts on specific altcoins. For example, the European Union's (MiCA) regulation on privacy coins (like Monero) entering the enforcement phase in 2025 has imposed stricter regulations, leading to a 15% drop in its price in a single day.
Technical risk: The technical reliability and security of altcoin projects may have issues. A report released by a blockchain analytics company in 2025 showed that as of mid-July, $2.17 billion in cryptocurrencies had been stolen from various platforms this year, surpassing the $1.87 billion thefts for the entire year of 2024.
5. Investment strategies and risk warnings
5.1 Investment strategies under different market scenarios
Based on the above analysis, investors can consider the following strategies for different market scenarios:
Mainstream coin strong breakout scenario:
Strategy: Continue to hold core positions in Bitcoin and Ethereum while monitoring whether funds start to flow into altcoins.
Allocation recommendations: Bitcoin 50-60%, Ethereum 20-30%, altcoins 10-20%.
Operational suggestions: Consider gradually increasing positions when Bitcoin breaks through $120,000 or Ethereum breaks through $4,315, but avoid chasing highs.
Mainstream coins high-level consolidation scenario:
Strategy: Utilize the consolidation opportunities of mainstream coins to adjust the investment portfolio and appropriately increase the allocation of promising altcoins.
Allocation recommendations: Bitcoin 40-50%, Ethereum 20-30%, altcoins 20-30%.
Operational suggestions: Consider adding to mainstream coins when Bitcoin pulls back to around $115,000 or Ethereum to around $4,190; simultaneously select fundamentally sound altcoins for gradual accumulation.
Mainstream coin pullback scenario:
Strategy: Remain cautious, control overall positions, and wait for clearer market signals.
Allocation recommendations: Bitcoin 30-40%, Ethereum 10-20%, altcoins 10-20%, stablecoins 20-40%.
Operational suggestions: If mainstream coins break below key support levels, consider further reducing positions; closely monitor whether funds are accelerating their diversion to altcoins and prepare to gradually increase positions when market sentiment hits bottom.
5.2 Altcoin investment strategies and selection criteria
For investors interested in participating in altcoin investments, the following strategies are recommended:
Gradual accumulation: Avoid making large, one-time investments; instead, make gradual investments to reduce price volatility risks.
Diversified investment: Spread funds across different types and tracks of altcoins to avoid over-concentration in a single project.
Fundamental assessment: Choose projects with practical application scenarios, technological innovation, and active communities. Specific evaluation criteria include:
Team background and development progress
Practical application cases and user growth
Development of partners and ecosystems
Token economics design
Technical analysis: Select entry timing based on technical analysis, focusing on key support and resistance levels, as well as changes in trading volume and other indicators.
5.3 Risk warnings and considerations
Investing in the cryptocurrency market involves various risks, and investors should fully understand and make cautious decisions:
Price volatility risk: The cryptocurrency market is highly volatile, with significant price fluctuations possible in a short period. Investors should be mentally prepared to avoid making irrational decisions due to emotional fluctuations.
Regulatory risk: The global cryptocurrency regulatory environment is continuously changing, and policy adjustments may have significant impacts on the market. Investors should closely monitor regulatory dynamics and adjust investment strategies in a timely manner.
Technical risk: Blockchain technology is still in development, with potential technical vulnerabilities and security risks. Investors should choose secure and reliable trading platforms and wallets to protect personal assets.
Market manipulation risk: The cryptocurrency market is relatively young and may be subject to market manipulation. Investors should remain vigilant and avoid blindly following trends.
Liquidity risk: Some altcoins have poor liquidity, which may lead to significant slippage when buying and selling. Investors should avoid making large transactions during periods of high price volatility.
6. Conclusion and outlook
The cryptocurrency market in August 2025 is at a critical crossroads. Bank of America's adjustment of expectations for Federal Reserve interest rate cuts brings new uncertainties to the market while also creating new investment opportunities.
After reaching an all-time high, Bitcoin has entered a pullback confirmation stage. The technical formation shows that it is preparing for the next phase of upward movement. If Bitcoin can effectively break through the $120,000 resistance level, it may initiate a new round of upward momentum, targeting $148,000. However, if it fails to break through key resistance, Bitcoin may face a deeper correction.
Ethereum is facing key resistance near $4,300, and the high-level consolidation situation is evident. Ethereum's next development direction will be influenced by institutional fund inflows, technological innovation, and regulatory environment among other factors. Breaking through the $4,315 resistance will open new upward space for Ethereum; otherwise, it may enter a pullback mode.
A trend of fund diversion is forming, indicated by the decline in Bitcoin's dominance and the net capital changes in Ethereum exceeding those of Bitcoin, suggesting the altcoin season may have officially begun. If mainstream coins continue to maintain high-level consolidation or start to pull back, funds may accelerate their diversion to altcoins, creating new investment opportunities for investors.
For investors, the current market environment is both challenging and full of opportunities. It is recommended that investors remain rational, manage risks appropriately, and develop reasonable investment strategies based on their risk tolerance and investment goals. Additionally, closely monitor macroeconomic events in August, such as updates on U.S. inflation data and the Jackson Hole central bank annual meeting, as these events may serve as key catalysts for the next phase of market movements.
As the cryptocurrency market continues to evolve and mature, investors' strategies should also be adjusted accordingly. Seeking certainty amidst uncertainty and seizing opportunities amidst volatility will be key to successful investing.
Risk warning
The analysis and predictions in this report are for reference only and do not constitute investment advice. The cryptocurrency market is highly volatile, and investors should bear the risk and make independent investment decisions.
