Today, as soon as I opened the cryptocurrency world, it was a complete mess:
🔻 BTC fell over 1.1%, ETH fell over 2.5%, and smaller coins like ADA, DOGE, and POL even dropped over 3%.
Many people are confused:
"Didn’t they say that the Fed not cutting rates means inflation is still present? Shouldn't that mean buying Bitcoin as a hedge?"
"Why then is there a collective drop? Is this a precursor to a crash?"
Today, I will explain the underlying logic in simple terms 👇
✅ 1. Core Reason: Market Disappointment + Failed Expectations
This time, the Fed did not cut rates, but more importantly — did not release any 'dovish' signals!
The market had long anticipated that "rate cuts might start in the second half of the year," so a lot of capital entered risk assets (including Bitcoin, Ethereum, etc.) in advance.
The reality is: The Fed's stance remains hawkish, and vigilance against inflation has not eased.
👉 Hence, we see the typical "good news realization = bad news" —
It’s not that the drop is because of no rate cut, but rather that everyone was betting on a rate cut, and when that expectation failed, disappointment began to sell off.
✅ 2. Is Bitcoin really an "inflation hedge asset"? Or is it a "risk asset"?
Many people have a misunderstanding, thinking:
> "Inflation is here ➡️ Money is devaluing ➡️ Buy BTC as a hedge!"
Indeed, this statement is theoretically valid, but only applies to long-term trends.
In reality, especially in the short-term market, most investors treat BTC and ETH as "high-risk assets," rather than safe havens like gold.
When interest rates remain high, the dollar is strong, and global liquidity is tight:
👉 Investors will choose to sell off crypto assets and return to cash or dollar-denominated assets.
👉 The crypto market becomes viewed as an "ATM," and naturally, it has to drop.
✅ 3. What other reasons amplify this?
1️⃣ Technical Breakdown:
BTC and ETH are both on the edge of important support levels; once they break down, it triggers a large number of automatic stop-loss orders, leading to sell-offs.
2️⃣ ETF Net Outflows Intensified:
Recently, Bitcoin ETFs (like BlackRock's IBIT) have seen capital outflows, indicating that institutions are also withdrawing.
3️⃣ Low Liquidity Amplifies Volatility:
Currently, it is the trading off-season in August, with weak buying and tight liquidity, making prices more prone to severe fluctuations.
