The pullback in BTC and ETH looks like a straightforward risk-off move rather than anything crypto specific, tracking closely with weakness in equities and the jump in Treasury yields this week. Both assets remain up sharply for the quarter despite the drawdown, so this reads as a pullback within an uptrend rather than a trend reversal so far, though the scale of the K33 reported drop in Bitcoin's spot volume is worth watching as a sign of thinning conviction. The most actionable driver for traders is the shift in Fed rate expectations, since crypto's lack of yield makes it particularly sensitive to repricing around the September 15 to 16 meeting. Separately, and this is context from earlier in the week rather than the latest 24 hours, large exchange deposits from market maker Wintermute and an unidentified ETH whale added a layer of on-chain selling pressure that likely amplified the initial leg lower, even though deposits alone don't confirm actual selling. Together, the setup suggests further downside is likely to be geopolitics and rates driven rather than structural, with the conflict's trajectory the single most important variable for both assets in the near term.---Earlier:Bitcoin technicals: The price of bitcoin is back below the 100/200 hour MA and making new corrective lows---Crypto's hot August run is cooling fast as war escalation and rising rate hike odds collide with thinning trading volume and reports of large holders moving coins to exchanges.Summary:Bitcoin traded in a range of roughly $76,600 to $78,000 through Tuesday and Wednesday, down around 1.5 to 2% as fresh US-Iran military strikes drove a risk-off reaction across markets.Ethereum fell to around $2,373 to $2,400 over the same period, down roughly 2 to 2.5%, with about $115 million in long positions liquidated within an hour during the sharpest part of the move, according to Coinglass.Both assets remain up sharply for the quarter, with Ether having gained 33% in August and 56% for the quarter as of recent reporting, meaning the current move looks like a pullback within an uptrend rather than a reversal so far.K33 reported that Bitcoin's average daily spot volume declined 35% over the past week to $3.1 billion, a notable drop in market participation even as price has held relatively steady.The immediate catalyst has been renewed US-Iran conflict, with US strikes targeting Iranian Revolutionary Guard Corps positions including air defense, radar and mine laying capability, and Iran retaliating against US bases in the region.CME FedWatch data showed market implied odds of a Fed rate hike at the September 15 to 16 meeting at around 66%, sharply higher than odds favoring a hold just a week earlier, adding pressure on non-yielding assets like crypto.As additional context from earlier in the week rather than the most recent 24 hours, reports flagged large on-chain exchange deposits, including around 5,100 BTC, worth close to $400 million, from market maker Wintermute to Binance, and nearly 41,000 ETH, worth over $100 million, from a separate whale or institutional wallet, both seen as possible signals of sell side pressure even though deposits do not confirm an actual sale.The crypto moves have closely tracked broader risk asset weakness this week, with the S&P 500 falling to its lowest level since August 4 and Treasury yields rising during the worst of the selloff.Bitcoin and Ethereum extended a pullback from their strong August run this week, as renewed military escalation between the United States and Iran drove a broad risk-off reaction across financial markets and pushed expectations for a Federal Reserve rate hike higher.Bitcoin traded in a range of roughly $76,600 to $78,000 through Tuesday and Wednesday, down around 1.5 to 2% as fresh US strikes against Iranian targets triggered renewed selling. Ethereum fell in tandem, dropping to around $2,373 to $2,400, a decline of roughly 2 to 2.5%, with the sharpest leg of the move accompanied by about $115 million in leveraged long positions liquidated within a single hour, according to data from Coinglass.The scale of the pullback should be read against the backdrop of a very strong prior month. Ether gained 33% in August and was up 56% for the quarter as of recent reporting, meaning the current move looks more like a pause or partial retracement within an established uptrend than a reversal, at least based on the price action so far. That said, K33 flagged a notable shift in underlying market conditions, reporting that Bitcoin's average daily spot volume fell 35% over the past week to $3.1 billion, a sign that trading conviction may be thinning even where price has held up relatively well.The immediate trigger for this week's weakness has been the renewed conflict between the US and Iran. US Central Command confirmed strikes against Islamic Revolutionary Guard Corps targets, including air defense positions, radar systems, mine laying capability and communication sites, prompting Iranian retaliation against US military installations in the region. The pattern has closely mirrored moves across other risk assets, with the S&P 500 falling to its lowest level since August 4 during the worst of Tuesday's selloff and Treasury yields climbing as investors priced in both geopolitical risk and shifting rate expectations.On the policy side, CME Group's FedWatch tool showed market implied odds of a Fed rate hike at the September 15 to 16 meeting rising to around 66%, a sharp shift from a week earlier when a hold was seen as the more likely outcome. Because Bitcoin and Ethereum do not pay yield, they are particularly sensitive to this kind of repricing, and the jump in hike odds has added a second, more structural headwind alongside the geopolitical shock.Adding further context, though this relates to earlier in the week's initial escalation rather than the most recent 24 hours, reports highlighted large on-chain transfers that may have amplified selling pressure. Market maker Wintermute reportedly deposited around 5,100 BTC, worth close to $400 million, to the Binance exchange over a two day period, while a separate whale or institutional wallet moved nearly 41,000 ETH, worth more than $100 million, to exchanges according to on-chain tracker Lookonchain. Exchange deposits of this kind do not confirm that coins were actually sold, but they are widely monitored by traders as a leading indicator of potential sell side flow, and their timing alongside the initial leg of this week's selloff suggests they may have contributed to the depth of the move.Taken together, the current setup points to a market being driven primarily by external macro and geopolitical forces rather than crypto specific developments. With both the trajectory of the US-Iran conflict and the outcome of this month's Fed meeting still unresolved, further volatility in Bitcoin and Ethereum in the days ahead looks likely to track those two variables closely. This article was written by Eamonn Sheridan at investinglive.com.