Ethereum News Today: Bitcoin and Ethereum drop 5% amid PPI-driven sell-off and Ethereum unstaking surge

Bitcoin and Ethereum experienced a dramatic reversal in early August 2025 after reaching record highs, fueled by optimism around potential Federal Reserve rate cuts and growing institutional interest [1]. Bitcoin briefly hit $124,500, surpassing the market valuation of major corporations like Google, while Ethereum climbed to nearly $4,800 for the first time since November 2021 [1]. However, the bullish momentum quickly collapsed as traders reacted to newly released U.S. Producer Price Index (PPI) inflation data [2], sparking a rapid sell-off that saw Bitcoin fall below $118,000 and Ethereum retreat to around $4,500 within hours [3].

The intraday selloff saw over $1.02 billion in positions liquidated, according to Coinglass, as traders scrambled to exit positions amid heightened volatility [2]. The drop was exacerbated by a surge in Ethereum unstaking from liquid staking platforms, with more than 761,000 ETH queued for withdrawal and Ethereum's unstaked value exceeding $3.6 billion [4]. This outflow signaled a wave of profit-taking or deleveraging, particularly among long-term holders and institutional participants. Withdrawal delays extended beyond 12 days, putting additional downward pressure on the price [4].

Rising borrowing rates on decentralized finance (DeFi) platforms also contributed to the sell-off. On platforms like Aave, Ethereum borrowing rates climbed from under 3% in mid-July to over 18%, making it increasingly unprofitable for investors to borrow and re-stake the asset [4]. This led to a cascade of position unwinds, with notable examples including Justin Sun’s $600 million ETH withdrawal from Aave [4].

Despite the sharp correction, the broader market remains bullish, with Ethereum needing to close above $4,800 to retest its all-time high. A close below $4,440, however, could push the price toward the key psychological level of $4,000 [4]. For Bitcoin, the pullback has sparked speculation about whether it is a temporary correction or a more substantial shift in momentum [5].

The sharp reversal highlights the crypto market’s continued sensitivity to macroeconomic indicators and liquidity dynamics. While institutional demand remains strong and ETF inflows are seen as stable, the market faces ongoing risks from regulatory developments and economic data releases. Analysts remain cautious, noting that volatility is likely to persist in the short term as traders reassess their positions [5].

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[1] title: Bitcoin price today: pulls back on PPI report after hitting ..., (https://www.investing.com/news/cryptocurrency-news/bitcoin-price-today-hits-record-high-over-124k-on-rate-cut-bets-corporate-cheer-4190493)

[2] title: Bitcoin Falls Below $118K After $1B Liquidations, (https://icobench.com/news/crypto-news-bitcoin-falls-below-118k-as-1b-liquidations-spark-panic/)

[3] title: The reasons for the sharp drop in Bitcoin and Ethereum ..., (https://www.moomoo.com/news/post/57024247/the-reasons-for-the-sharp-drop-in-bitcoin-and-ethereum)

[4] title: Ethereum Validators Unstake Over $3.6 Billion, ETH USD ..., (https://99bitcoins.com/news/altcoins/ethereum-validators-unstake-over-3-6-billion-eth-usd-falls-whats-going-on/)

[5] title: Bitcoin Pullback to $121800: Is This a Temporary Drop ..., (https://pintu.co.id/en/news/194215-bitcoin-pullback-to-121800-is-this-a-temporary-drop-before-the-surge)