In the past two days, Bitcoin and Ethereum are no longer simply 'spikes,' but have fully entered plunge mode: prices have continuously broken through key support levels, leading to a chain of liquidations in leveraged positions, and emotions have hit rock bottom. Many are still asking: Is this decline really just a simple technical adjustment?


The answer is brutal — the real driving force behind it is the Federal Reserve.

1. Retail investor frenzy, institutional quiet retreat


Just a week ago, market expectations for a rate cut in September peaked.

  • CME FedWatch tool shows that the probability of rate cuts once soared to over 90%.

  • Major social media and retail investor communities are filled with rhetoric that 'the Federal Reserve must cut rates, and liquidity will flood in.'

  • Bitcoin and Ethereum surged rapidly on this wave of enthusiasm, with retail investors pouring in wildly.

But at the same time, large funds on Wall Street are retreating:

  • Institutions such as Barclays, Bank of America, and Morgan Stanley have clearly indicated in their reports: 'The probability of interest rate cuts is greatly overestimated.'

  • Goldman Sachs even advises clients to hedge against the risk of 'no rate cut in September.'

    The divergence between retail investors and institutions has reached historical extremes.

2. Data provides ironclad evidence: The conditions for interest rate cuts are fundamentally not in place


The three major logical supports for rate cuts are collapsing one by one:

  • Core inflation rebound: The CPI excluding food and energy continues to rise month-on-month, with 'super core inflation' surging by 0.55%. Inflation has not decreased but has risen, and rate cuts would just add fuel to the fire.

  • The employment market remains strong: The unemployment rate is still below 4%, and hourly wage growth remains above 4%. There has been no so-called 'collapse' in the labor market.

  • Tariff effects have not yet manifested: The tariffs imposed on Chinese electric vehicles, semiconductors, and other goods have not yet fully transmitted; once costs are passed on to prices, inflation may erupt again.

These three points combined mean that a rate cut in September is almost impossible. The optimistic expectations of retail investors are being shattered by reality.

3. From spikes to plunges: The brutal correction in the market


The reversal of macro expectations is just a trigger; what truly caused the plunge is the fragility of the cryptocurrency market structure:

  • High-level profit-taking is accelerating the selling pressure.

  • Technical levels have been repeatedly lost, triggering a chain of liquidations in leveraged positions.

  • Funds are partially shifting towards the dollar and gold, putting passive pressure on Bitcoin and Ethereum.

Ultimately, $BTC broke below $113K, and $ETH simultaneously plunged significantly. The spike was just a momentary scare, while the plunge is the real bloodbath.

4. My view


This round of decline is essentially the 'bursting of the rate cut bubble.'

  • Retail investors are immersed in the fantasy of 'massive liquidity in September,' pushed into the market by emotions;

  • Wall Street institutions are calmly hedging and reducing positions in advance;

    When expectations begin to waver, the market ruthlessly harvests the last buy orders.

In the short term, risk assets will continue to experience volatility downward before the Jackson Hole annual meeting and the September Federal Reserve meeting.

In the medium term, we need to wait for the August CPI and employment data to determine the new direction of the market.

The plunge in Bitcoin is not merely a 'bull-bear game,' but a collective disillusionment in a macro narrative.

While Wall Street retreats, retail investors are buried. In such a large divergence, the market never shows mercy to emotional bettors.#俄乌冲突即将结束？ #加密市场回调