YouHodler’s chief of markets, Ruslan Lienkha, and Function CEO Thomas Chen comment on recent crypto movements.
BTC and ETH’s Pullbacks
“The recent pullback in BTC and ETH is essentially a reflection of broader market sentiment, particularly the mild correction currently observed in U.S. equity indices. The key question is whether equities are experiencing a temporary correction or entering a more structural downturn, a point that remains uncertain.”
“We are in the later stages of the current bullish trend, which means that any correction has the potential to evolve into the beginning of a medium-term bearish market. Against this backdrop, I would lean toward a more cautious approach, either by increasing hedges or reducing portfolio exposure to minimize downside risk. Many fund managers are adopting a similar stance at this stage.”
– Lienkha
BTC’s volatility
“Bitcoin’s Historical Volatility Index remains relatively low, and realized volatility has not increased significantly, which suggests that the current options positioning does not yet resemble a classic ‘volatility trap.’ At the same time, however, growing concerns about stretched U.S. equity valuations, particularly in relation to the AI-driven rally, are fueling stronger demand for hedging. This broader risk aversion is likely contributing to elevated demand for downside protection in Bitcoin as well.”
– Lienkha
Key macro catalysts
“The key macro catalysts for crypto heading into September remain U.S. inflation, interest rate policy, and labor market data. The interaction of these factors will largely shape overall risk sentiment and, in turn, the trajectory of both traditional and crypto markets.”
– Lienkha
To what extent did whale activity vs. macro conditions (yields, Fed expectations) drive the latest sell-off?
“The recent sell-off reflects a combination of macro conditions and long-term positioning by large holders. We are entering the later stages of the current medium-term bullish cycle, which naturally encourages early investors, particularly those who have held Bitcoin for 10 years or more, to realize significant profits.”
“By contrast, more recent whale entrants are likely to adopt a longer-term horizon, prepared to hold through one or even several future cycles. Overall, while whale activity has contributed, the dominant driver remains macro factors such as yields and shifting expectations around Federal Reserve policy.”
– Lienkha
Rate cuts and possible corrections across Bitcoin and Ethereum
“80/20 principle: 80% fed rate cut optimism, 20% fundamentals. Most price action reflects traditional risk-asset behavior tied to monetary policy, where investors are rallying around anticipated liquidity.”
“Any deviation from the Fed script in September will cause a violent repricing. A delayed or ‘no-cut’ scenario from the Fed could trigger a large correction across major crypto assets and altcoins.”
“This isn’t a crypto problem but a leverage problem: expectations that the Fed will cut rates (means) liquidity will flood the market (and) crypto goes up.”
“This is a crowded trade, a house of cards on a single narrative of a soft landing. If the optimism is misplaced, don’t be surprised if a cascade of forced selling occurs.”
“The correction would likely separate speculative crypto positions from genuine institutional Bitcoin and Ethereum deployments.”
– Chen
On the latest Bitcoin selloff and simultaneous ETF accumulation
“The divergence between the Bitcoin selloff and ETF accumulation signals sophisticated institutional buying during retail panic selling. Institutions are coming into ‘hodl’ with a capital ‘H’.”
“ETFs are the best institutional rails today and represent long-term allocation strategies that are less sensitive to short-term volatility. This is a healthy market evolution and maturation of an asset class where speculative capital exits and productive capital enters through institutional infrastructure.”
The warning sign of deeper volatility isn’t in profit-taking but rather leverage in the system. The volatility is a direct result of too much cheap, speculative capital. Once that’s flushed out, the market, now backed by permanent ETF capital, can build a healthier foundation for the next phase.”
– Chen