August Market Turning Point: Policy Headwinds Trigger crypto market crash, BTC and ETH Monthly Candles Close Red

The Catalyst Behind Yesterday’s Decline

Markets opened the month with a sharp reversal—both Bitcoin and Ethereum printed red monthly candles on August 1st, signaling a potential shift in momentum. Behind this move lies a confluence of factors: escalating US policy uncertainty, renewed inflationary concerns driving hawkish central bank rhetoric, and technical exhaustion after sustained rallies. Bitcoin spot exchange-traded fund investors pulled $114.69 million overnight, while Fed Chair Powell’s latest comments dampened expectations for imminent rate cuts, creating a risk-off environment that spread across digital asset markets.

Technical Picture: Where Are We Now?

Bitcoin ($87.51K, -0.42% in 24h)

On the daily timeframe, BTC is wrestling with a downtrend resistance line. Yesterday’s bearish engulfing candle wiped out the prior session’s lows, erasing bullish conviction. A close below the $87.51K level today could invalidate the intermediate uptrend, potentially opening the door for a descent toward $82,000-$84,000. However, the rising trendline itself remains a critical support zone—if price bounces here on the daily chart and confirms with bullish divergence on the hourly, a rebound toward $91,400 is plausible, though any failure to hold would strengthen the bearish case.

Ethereum ($2.93K, -0.55% in 24h)

Ethereum faces adjustment pressure following its one-sided advance. The annual opening price near $3,337 acts as near-term support; resistance sits at $3,820, with $3,870 as the critical breakout level. If ETH fails to clear and sustain above $3,870, top divergence signals could trigger a sharper correction down to approximately $3,200. On the hourly chart, a rebound toward $3,800 is possible, but resistance here presents an attractive shorting opportunity for disciplined traders before the market potentially extends its decline.

Key Events Requiring Attention

1. US Economic Data (Tonight, 20:30 UTC): Non-farm payroll expected at 11K vs. prior 14.7K; unemployment rate forecast 4.2% vs. prior 4.1%. These figures directly influence Fed rate cut timing through September.

2. Federal Reserve Appointments: Two board seats remain vacant, with nominations expected before year-end. Recent political commentary has reignited debate around Fed leadership philosophy.

3. Emerging Opportunities in Altcoins: Solana ecosystem activity showing signs of life—tokens like those in the Base ecosystem (Clanker, bnkr, dbr) have gained traction. Jupiter (JUP, +0.56% in 24h) continues accumulating volume, warranting observation.

4. Reserve Assets Watch: XRP ($1.85, -0.85% in 24h), BNB ($835.50, -0.85%), DOGE ($0.12, -3.96%), and SOL may stabilize first among major holdings before next leg higher.

Trading Approach: Risk Management First

For those deploying capital during downturns, focus on quality reserve assets across different market cap tiers—Bitcoin, Ethereum, XRP, BNB, DOGE, SOL, and emerging tokens like PEPE and PENGU. A measured accumulation strategy over 1-2 weeks positions participants before the anticipated rally phase.

Tactical positioning for experienced traders:

• Long bias on Bitcoin and Ethereum (institutional support remains intact)
• Selective short positions on underperforming altcoins with weaker fundamentals
• Stop-loss discipline essential; avoid leverage during volatile regime transitions
• High short opportunities at $91,400 (BTC) and $3,800 (ETH) if resistance is encountered

The Bottom Line

The crypto market has entered a consolidation phase punctuated by policy uncertainty. While near-term technicals suggest downside risk, foundation investors should view pullbacks as accumulation windows rather than exit signals. The rebound setup exists, but confirmation through hourly divergence patterns will be your entry signal.