“The week started with a sharp correction of major assets,” noted Sean Dawson, head of research at the on-chain options exchange Derive.xyz.
He added that Bitcoin’s daily volatility jumped from 15% to 38%, while Ethereum’s increased from 41% to 70%.
According to Dawson, the main trigger was the release of the Producer Price Index, which came in higher than expected. Traders are hedging risks ahead of key macroeconomic data: the U.S. GDP report on August 28 and labor market data in early September.
The derivatives market confirms the negative sentiment. The 25-delta skew for Bitcoin and Ethereum turned negative, as market participants actively bought put options. Dawson suggested that by the end of September, Bitcoin could test $100,000 and Ethereum $4,000.
Glassnode data shows open interest in Bitcoin futures declined by 2.6%. Meanwhile, funding payments for long positions rose 29% — from $2.8 million to $3.6 million — exceeding historical averages. Analysts noted this as a dangerous combination, where slowing price growth could trigger a chain reaction of position liquidations.
On-chain activity shows mixed signals: daily active addresses have decreased, while transaction volume has grown. This indicates that the market is driven by short-term speculators rather than organic demand.
Timothy Misir, head of research at BRN, described the correction as “a leverage flush amid a weakening market.” He noted that daily liquidations could approach $1 billion. Misir highlighted the following key Bitcoin levels:
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$110,000 — the average entry point for short-term investors. Holding above this level may stabilize the market.
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$103,700 and $100,800 — critical levels. A breakdown below would undermine the current bullish trend and trigger another wave of selling.
Positive Signals
Despite the correction, major companies and institutional investors are buying Bitcoin at lower prices. On August 25, Strategy acquired 3,081 BTC worth $357 million.
BitMine Immersion increased its Ethereum reserves by 190,500 ETH worth $2.2 billion. The company now holds 1.7 million ETH valued at $7.7 billion.
According to SoSoValue, spot Bitcoin ETFs attracted $219 million after a weekly outflow of $1.1 billion. At the same time, Ethereum-based funds recorded inflows of $444 million.
However, the market remains under pressure from uncertainty surrounding U.S. monetary policy. At last week’s Jackson Hole symposium, Federal Reserve Chair Jerome Powell struck a dovish tone.
Currently, 88.3% of market participants expect a rate cut at the upcoming FOMC meeting on September 17.
Reminder: earlier, FORECK.INFO reported “Investors Pull $1.43B From Crypto Funds Amid Fed Decision Fears”—a breakdown of the outflows, ETF flows, and the growing tilt toward Ethereum; read the full analysis here