After a significant drop in the cryptocurrency market at the beginning of August (Bitcoin fell below $115,000 and Ethereum lost $3,600), whether it continues to decline in the future depends on the interplay of multiple factors. The following is an analysis based on the latest market dynamics and in-depth data:
📉 I. Core reasons for the current decline
1. Surge in macro risks
- U.S. tariff policy: The new tariffs effective August 1 (25% on Indian goods, 50% on copper and other materials) have raised global supply chain concerns, exacerbating the sell-off of risk assets.
- Economic data is weak: Weaker-than-expected U.S. employment data and uncertainty in Federal Reserve interest rate policy weaken market confidence.
- Risk aversion spreads: Funds are shifting from cryptocurrencies to safe assets like government bonds, leading to a contraction in market liquidity.
2. Technical breakdown triggers leveraged liquidation
- After Bitcoin fell below the key support of $115,000, over $850 million in leveraged positions were liquidated (mostly long positions), creating a 'long squeeze' downward spiral.
- Ethereum fell below $3,600 and further tests $3,500; if it loses $3,480, it may trigger liquidations on the order of $1 billion.
3. Profit-taking pressure and seasonal patterns
- After Bitcoin reached a historical high in July, long-term holders realized over $6 billion in profits, while short-term holders holding 37,000 BTC are in a loss position, leading to continued selling pressure.
- Historical data shows that **August is one of the weakest months for Bitcoin**, with a median return of -7.49% over the past decade, recording positive returns only four times.
🛡️ II. Positive signals for stopping the decline
1. Institutional funds continue to enter the market
- Ethereum spot ETF has seen a net inflow for 20 consecutive days (accumulated $2.185 billion in July), providing support for ETH.
- Japan's publicly listed company Metaplanet plans to raise $3.7 billion to acquire 210,000 BTC, strengthening long-term bullish expectations.
2. Key technical support levels
- Bitcoin: $114,000-$115,000 is viewed by analysts as a 'strategic accumulation zone', with $112,000 as strong support.
- Ethereum: $3,100-$3,500 is considered a liquidity-rich zone; if it holds, it may rebound to $4,000.
3. The options market shows implied optimism.
- The Bitcoin put/call ratio is 0.65, and there is significant call option accumulation in the $116,000-$120,000 range, indicating that institutions are betting on a short-term rebound.
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Mid to long term (Q4)
- Conditions for bull market continuation: If inflation data improves and ETF funds continue to flow in, Bitcoin could challenge $140,000.
- Structural transformation: The collapse of Meme coins may drive funds towards BTC/ETH and compliant assets (like RWA), promoting market health.
💎 Summary: Downside risk remains, but is controllable.
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📉 August bearish: Affected by seasonal patterns, macro policies, and leveraged liquidation, the market may further decline (BTC $112k, ETH $3.1k).
> 💡 Key defensive zone: $114k-$115k is the pivotal point for Bitcoin bulls and bears; if it holds on the weekly chart, the mid-term trend remains intact.
> 🏹 Layout direction:
> - In the short term, avoid high Beta cryptocurrencies (like Meme coins, SOL), and prioritize low-position accumulation opportunities in BTC/ETH;
> - Long-term investors can build positions in batches, focusing on the September inflation data (to be released on August 12) and the Federal Reserve's Jackson Hole meeting (August 21).
The market is currently in a 'panic digestion phase', but **every dip is a stress test for the bull market**. Liquidity has not dried up (stablecoin Tether earned $4.9 billion in Q2), and institutional holdings are rising, indicating that this round is more likely a technical correction rather than the beginning of a bear market.
