Selling pressure in the cryptocurrency market is approaching exhaustion, according to Wintermute. Even so, it is too early to expect a strong rebound, and traders need to watch whether last week’s lows give way on heavier volume.

Wintermute, a crypto market maker, wrote in a research report on Aug. 4 that the market held up relatively well last week despite the Federal Reserve’s hawkish decision to hold rates steady, a sharp rise in 30-year US Treasury yields and heavy liquidation of artificial intelligence-related fund positions.

Bitcoin fell 2.84% last week, while Ether dropped 3.63%. Over the same period, the 30-year US Treasury yield rose to 5.24%, its highest level since July 2007. The Fed left its benchmark rate unchanged at 3.50% to 3.75%, though three policymakers supported a 0.25 percentage-point increase.

Major cryptocurrencies falling less than 4% despite those shocks suggests the market is close to running out of additional sellers, Wintermute said. The firm also said it had viewed a cooling of overheated equity markets as a prerequisite for crypto to complete its correction, and that the recent broad unwinding of AI-related investment positions was part of that process.

Still, Wintermute said it is premature to call the start of a full-fledged bull market. Most market participants are not positioned for a strong rebound. Open interest has increased in some tokens, while open interest in major cryptocurrencies remains low, leaving room for a short-term technical squeeze.

If prices break below last week’s lows as trading volume increases, the current view that selling pressure has been exhausted would no longer hold, it added.

Separately, Wintermute said US spot Bitcoin exchange-traded funds posted net outflows of $265 million on the final trading day of last month. Spot Ether ETFs, by contrast, recorded $27 million of inflows last week, extending their streak of net inflows to four straight weeks. Wintermute said that points to some institutional interest shifting from Bitcoin to Ether.