Crypto Market Retreats, Bitcoin Down 8% Since Peak Ahead of Powell’s Jackson Hole Remarks

Bitcoin slipped below $113,000 on Wednesday, dragging the broader crypto market lower as traders braced for Federal Reserve Chair Jerome Powell’s address at Jackson Hole.

The sector shed 1.5% to $3.9 trillion, with Ethereum, XRP and Solana all in the red.

The world’s largest cryptocurrency is now down about 8% cent from its record above $124,000 last week. Ethereum eased 1.2% on the day to $4,162, while XRP fell 3.2% to $2.90.

The drop follows a period of heavy profit-taking that gathered momentum after Bitcoin’s sharp rally earlier this month.

Market Value to Realized Value, a gauge of unrealized gains, climbed to 21% last week, showing that most holders were sitting on substantial profits. That created strong incentives to sell, analysts said.

Liquidations also intensified during the downturn in the last 24 hours. Data from Coinglass showed that more than 128,000 traders were wiped out in the past 24 hours, with total losses amounting to $450.7m.

Ethereum led the wave with nearly $175m liquidated, followed by Bitcoin at $101m. Long positions made up the bulk of the wipeouts, accounting for over $373m, showing how overleveraged bullish bets were forced out as prices retreated.

Markets Expect Caution From Powell Amid Fragile Outlook

The pullback comes just two days before Powell’s keynote in Wyoming. Investors are watching closely for signals on whether the Fed is prepared to cut rates in September or remain focused on inflation. July’s economic data painted a mixed picture, with headline consumer prices slowing to 2.7%, but core inflation edging up to 3.1% and producer prices rising 3.3%.

The combination of cooling job growth and persistent price pressures has stirred stagflation concerns, complicating the Fed’s decision.

Bitcoin has often reacted sharply to Powell’s words at Jackson Hole. In 2022, a hawkish speech that reaffirmed tightening led to a 10% weekly drop. Market watchers expect Powell to tread carefully this year, avoiding a clear rate-cut pledge but leaving room to adjust if inflation trends weaken.

Institutional Flows Seen Offsetting Short-Term Market Weakness

Dom Harz, co-founder of Bitcoin DeFi protocol BOB, said the retreat is little more than a pause after record highs. “This short-term correction is really just noise; a minor distraction from the fact that Bitcoin and, particularly Bitcoin DeFi, are undeniably rising,” he said.

He pointed to continued institutional demand as a key driver. “Mainstream and institutional adoption will continue to be a driving force behind Bitcoin, as institutions continue to accumulate the crypto asset. This will also drive technological developments in Bitcoin DeFi,” he said.

Meanwhile, Ruslan Lienkha, chief of markets at YouHodler, said it is too early to judge where the correction will settle. “The current correction is still unfolding, and it remains uncertain at which levels it will ultimately stabilize,” he said.

Medium-Term Investors Seen Securing Profits as Markets Look Stretched

Lienkha warned that weakness in equities could deepen the slide. “A significant correction in equity markets, for example, could trigger a deeper pullback in Bitcoin as well. That said, it is true that Bitcoin’s historical volatility has been gradually declining over time,” he added.

He said profit-taking reflects caution rather than lost confidence. “Profit-taking is indeed occurring at the moment, and in many cases, it reflects disciplined risk management. This is particularly true in the current environment, where institutional discussions increasingly emphasize that we may be entering the later stages of the bull market.”

Fund managers have voiced concerns that US stocks are overvalued, encouraging some to lock in gains in crypto. Lienkha said this trend is more about portfolio balance than outright bearishness.

“While long-term investors are generally less affected by these short-term dynamics, those operating within medium-term horizons, such as two- to three-year cycles, often adopt relative strategies that encourage them to secure gains when markets look stretched,” he said.