Bitcoin returns to the $110,000 level. Is this a continuation of the shift of capital to Ethereum or a risk reduction strategy in the face of persistent macroeconomic uncertainty?
Bitcoin returns to the $110,000 level
Since its last historic high on August 14 of over $124,000, the price of BTC has been undergoing a correction, leaving us wondering at what level it will stabilize. Bitcoin has fallen more than 11% since that record high, which has just pushed its price down to the $110,000 level.
This threshold is now considered an important support level, having already been tested numerous times as resistance since December of last year. Suffice it to say that the bullish effect triggered by recent statements from US Federal Reserve (Fed) Chairman Jerome Powell has been short-lived.
At the same time, the US president continues to unsettle the financial markets following the dismissal of Federal Reserve Governor Lisa Cook. This pressure was deemed unbearable by European Central Bank (ECB) President Christine Lagarde, who issued a warning to Donald Trump about the “dysfunctional” nature of his policy in this area.
It’s an unstable equation, in which a Bitcoin whale has just decided to liquidate 24,000 BTC, estimated to be worth $2.6 billion. This has led some analysts to view the decline in BTC as confirmation of the boom triggered by Ethereum, even though it now seems that uncertainty has taken precedence over hopes of capital rotation.
Capital rotation vs. risk reduction
During August, the US spot Bitcoin ETF market recorded net outflows estimated at over $1 billion. This situation is all the more unusual given that the spot Ethereum ETF market recorded massive inflows of over $3 billion.
This scenario is favorable to the prospect of capital rotation from BTC to Ether. This is especially true since ETH finally reached a new ATH on August 24, approaching $5,000 and erasing its previous record set in November 2021 for good.
However, the current appeal of Ethereum could well be hampered by a risk reduction policy in the face of continuing uncertainty in the financial markets. This view is shared by Rachael Lucas, crypto analyst at BTC Markets, who sees “a correction driven by a combination of profit-taking, technical resistance, and revised expectations for interest rates.”
In the broader cryptocurrency market, liquidations exceeded $900 million in a single session. Capital that was rotating between Bitcoin and Ethereum is now moving to a broader risk-off position.
Rachael Lucas
In the current situation, the key levels to watch for Bitcoin are $105,000—as a bearish breakout zone—and $100,000, from a purely psychological standpoint. In the event of a possible rebound, there is little reason to hope for more than stabilization around $120,000, given the persistent macroeconomic uncertainties.
