Whales Sell, ETPs Shift—Bitcoin Bears Eye Rate-Cut Reflation Play

Bitcoin traders are navigating a landscape of heightened macroeconomic uncertainty as institutional activity and market dynamics shift in response to broader economic indicators. With critical U.S. macroeconomic data expected in the coming week, including the Producer Price Index (PPI) and Consumer Price Index (CPI), market participants remain cautious about potential volatility. The U.S. Federal Reserve is widely expected to cut interest rates by at least 25 basis points during its September meeting, according to the CME Group’s FedWatch tool, with some speculation pointing to a larger-than-expected reduction of 50 basis points. Such moves could influence capital reallocation from traditional fixed-income instruments to riskier assets, including Bitcoin and other cryptocurrencies.

Bitcoin’s price has faced downward pressure in recent weeks, with traders closely monitoring the $100,000 psychological level as a potential bottom target. Analysts have pointed to Fibonacci retracement levels and historical bear market patterns to support this scenario, with some suggesting a 30% correction from Bitcoin’s recent high of $124,000 could bring the price down to approximately $87,000. Meanwhile, on-chain data reveals a concerning trend among large Bitcoin holders—often referred to as “whales”—who have reduced their BTC exposure by over 100,000 BTC in the past 30 days. This drawdown mirrors similar behavior seen during the 2022 bear market and signals growing risk aversion among institutional investors.

Institutional sentiment is also shifting between major cryptocurrencies. Recent data shows a significant “re-rotation” from Ethereum (ETH) to Bitcoin, as evidenced by net inflows into Bitcoin ETPs and outflows from ETH ETPs. According to Andre Dragosch, European head of research at Bitwise, Bitcoin ETPs added $444 million in the five days through September 5, while Ethereum ETPs recorded outflows of over $900 million in the same period. This trend is consistent with broader market behavior, as Bitcoin spot ETFs attracted $246.4 million in inflows last week, compared to $787.7 million in outflows from Ethereum ETFs. The shift appears to reflect a renewed preference for Bitcoin’s perceived stability relative to the more volatile Ethereum ecosystem.

Liquidity dynamics in Bitcoin futures markets are also raising concerns. On the Binance platform, the Taker Buy/Sell Ratio—measuring the proportion of buy volume to sell volume—is forming a bearish divergence, with lower lows despite the price continuing to rise. This signal has historically been associated with corrections in bull markets, and its current behavior suggests a potential loss of institutional confidence. Binance’s Bitcoin futures market has already seen more than $700 trillion in trading volume since 2019, surpassing global real estate and equities markets combined. However, if this liquidity trend continues without a corresponding recovery in buying pressure, it could indicate deeper structural weakness in the market.

The broader financial landscape is also undergoing significant shifts that could influence Bitcoin’s trajectory. U.S. money market funds have reached record highs of over $7 trillion, with many analysts speculating that these funds could be redeployed into riskier assets like cryptocurrencies as rate cuts reduce the attractiveness of cash holdings. David Duong of Coinbase noted that this cash pile, primarily retail-driven, could enter equities, crypto, and other asset classes as yields fall. However, the extent of this rotation depends on macroeconomic conditions—if economic uncertainty persists, investors may remain hesitant to exit money market funds despite reduced returns.