Recently, both BTC and ETH prices have shown significant pullbacks. BTC has fallen from a year-to-date high of $124,000 to around $112,000, a decline of nearly 10%; ETH has retreated from a high of nearly $4,900 to the $4,100–$4,200 range. This round of decline occurred after a substantial rise, more in line with the characteristics of a phase adjustment in a bull market, and there are currently no signs of a trend reversal.

Liquidity Tightening Combined with Institutional Profit-Taking as Major Downward Drivers

Overall market liquidity remains tight. Although the Federal Reserve has entered a rate-cutting cycle, quantitative tightening has not yet fully ended, and the growth of stablecoin market capitalization is limited, with insufficient new funds entering the market. At the end of the quarter, some institutions and large holders chose to rebalance their portfolios or take profits, increasing short-term selling pressure. For example, a fund address redeemed 16,800 ETH in one go just before the decline, indicating that some leveraged funds reduced their positions in advance. Such rebalancing behavior is common in both traditional and crypto markets.

Federal Reserve Enters Rate-Cutting Cycle, Medium to Long-Term Liquidity Improvement Expectations Remain

At the September FOMC meeting, the Federal Reserve announced its first rate cut since 2019, lowering the federal funds rate to a range of 4.00%–4.25%. Chairman Powell stated in his speech that the trend of falling inflation is becoming clearer and that the labor market supply and demand are balancing. The market expects there may still be 50 basis points of rate-cutting space within the year. Rate-cutting expectations imply that the medium to long-term liquidity environment may improve, providing support for risk assets. However, short-term market performance shows that the easing policy has been partially priced in, leading to a brief "buy the expectation, sell the fact" trend.

Rising U.S. Treasury Yields and Dollar Index Rebound Pressure Short-Term Risk Appetite

Recently, rising U.S. Treasury yields and a rebound in the dollar index have put pressure on risk assets. Additionally, September has historically been a period of tightening liquidity, with BTC's average historical return in this month being negative, and seasonal factors also causing market disturbances. Technically, BTC and ETH have shown signs of being overbought after a rapid rise, with market sentiment retreating from previous optimism to a neutral level, leading some investors to choose to reduce their positions temporarily.

Derivatives De-Leveraging Amplifies Downward Trend, but Market Bottom Support is Evident

During the spot price decline, the de-leveraging effect in the futures market further exacerbated the downward trend. Data shows that during this round of pullback, several hundred million dollars worth of long positions were passively liquidated across the network. After key technical levels were breached, stop-loss orders were triggered, increasing short-term selling pressure. However, on the other hand, on-chain monitoring indicates that some whales and medium to long-term investors have increased their BTC holdings at lower levels, suggesting that the market has not experienced large-scale panic selling.

Long-Term Funds Continue to Accumulate, Medium to Long-Term Market Support Remains

The total market capitalization of stablecoins remains stable, indicating that off-exchange funds have not significantly flowed in, but fluctuations in exchange balances reflect that some funds chose to accumulate during the pullback. The activity of whale addresses has increased, with the number of addresses holding 100–1,000 BTC rising, indicating that some investors are positioning themselves during the adjustment phase. Meanwhile, the proportion of BTC that has not moved for over a year is close to historical highs, suggesting an increase in the proportion of long-term chips in circulation, which typically helps alleviate selling pressure. ETH on-chain activity remains at a high level, and although the short-term unlocking scale is large, institutional accumulation continues.

Options Pricing Indicates Short-Term Volatility, Medium-Term Direction Unclear

Options market pricing shows that short-term volatility has decreased to relatively low levels, with the market expecting a sideways consolidation in the coming weeks. The short-term options skew structure is slightly bullish, but the medium to long-term skew indicates that investors still have a certain demand for downside protection. The Put/Call ratio is close to balanced, reflecting a trend towards rational market sentiment, with investors increasing hedges while maintaining exposure. Overall, the derivatives market is insensitive to short-term volatility but remains cautious about medium to long-term uncertainties.

Investment Advice: Use Structured Tools for Risk-Return Balance

In summary, the recent pullback of BTC and ETH is primarily driven by tight liquidity, institutional rebalancing, macro uncertainties, and de-leveraging in derivatives, with no trend reversal observed in the market. As the Federal Reserve enters a rate-cutting cycle and institutional funds continue to position themselves, the medium to long-term environment still has some support.

In this context, investors can flexibly use structured products based on their risk tolerance:

Matrixport will continue to provide clients with compliant, transparent, and diversified structured products to assist investors in optimizing their risk-return ratios during volatile cycles.

 Disclaimer: The market has risks, and investments should be made cautiously. This article does not constitute investment advice. Digital asset trading may involve significant risks and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions made based on the information provided in this content.

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