Market Update: Bitcoin and Ether Retreat After Recent Rally

Bitcoin retreated to around $115,500 on Sunday, with ether also dipping to roughly $4,330, as recent U.S. macroeconomic data weighed on market optimism.

The declines come after last week’s rally, which had been driven by cooler-than-expected consumer inflation figures.

Over the past 24 hours, bitcoin dropped about 2%, briefly reaching an intraday low near $115,046. This marks a roughly 7.5% decline from the record high of $124,350 set earlier this week. Ether similarly fell by more than 3% to trade near $4,329.

Analysts point to the July producer price index, which grew 3.3% year-over-year—higher than anticipated, as a major factor behind the pullback. Stronger inflation data has reduced expectations for a September interest rate cut, boosting the U.S. dollar and prompting investors to adopt a more cautious stance.

“Investors are reassessing risk in light of higher inflation readings,” said Vincent Liu, Chief Investment Officer at Kronos Research. “This has temporarily slowed momentum in digital assets.”

Confidence was further tempered by comments from the U.S. Treasury, indicating no immediate plans to incorporate bitcoin into strategic reserves, with officials exploring alternative approaches to reserve management. Market sentiment, measured by CoinMarketCap’s fear and greed index, currently sits at 56, reflecting a neutral outlook.

Despite these short-term setbacks, some experts highlight that institutional engagement remains robust. Spot ETF data shows flows shifting from certain bitcoin ETFs, such as Grayscale and ARK Invest, toward others like BlackRock’s IBIT. Ether ETFs have exhibited similar movement.

“Rather than exiting the market, investors appear to be reallocating into products with lower costs,” said Rachael Lucas, crypto analyst at BTC Markets.

Technically, bitcoin is finding support near $115,000 and $112,500, with a drop below these levels potentially opening the door to further declines toward $110,000.

Looking ahead, U.S. macroeconomic developments are expected to guide market direction. Key upcoming events include the Federal Reserve’s Jackson Hole Symposium and the release of initial jobless claims data on August 21, which could influence risk appetite and trading behavior.

“Traders are awaiting clear signals from macroeconomic releases and institutional flows before making significant moves,” Liu added.